Workshops

Wednesday, March 28, 2007 — Workshop 1

Note: The start time for this Workshop has been changed to 9:00 a.m.

Operational Risk Management

The term “operational risk” rarely is assigned a specific definition, rather a list of functional areas and processes are associated with it. Examples include information technology, business continuity, human resources, change management, and reputation risk, among others. So, how does an organization manage an undefined risk? This workshop provides insightful guidance from industry leaders on how to conceptualize and manage operational risk.

Workshop Faculty:

Ali Samad-Khan, OpRisk Advisory
Andrew Liakopoulos, Deloitte Consulting
Wayne Fisher, Zurich Financial Services
Carl Groth, Deloitte & Touche, LLP
J. David Cummins, The Wharton School
Michael Rasmussen, Forrester Research, Inc.
Samir Shah, Towers Perrin
Sharon Douglas, AFLAC, Inc.
Rick Burt, Deloitte Consulting

8:00 a.m. – 9:00 a.m.	Registration & Continental Breakfast
9:00 a.m. – 11:15 a.m.	Session 1: Defining and Classifying Operational Risk

Before you can manage operational risk you need to understand what risk really means and the operational elements of the company. Operational risks span causes (lack of supervision), events (fraud), and consequences (lawsuits). How can one incorporate all these elements into a single comprehensive definition and how will doing so facilitate better managerial decision making? In this session you will learn the true nature and meaning of the word risk, the fundamental characteristics of operational risk, the differences in definitional standards, the evolution of this field over the past decade, and different approaches and methods used in an advanced measurement and management framework.

11:15 a.m. – 11:30 a.m.	Networking & Refreshment Break
11:30 a.m. – 1:00 p.m.	Session 2: Talent Management—The Soft Component of Operational Risk

Pending baby boomer retirements, a lack of skilled replacements, and more demand for professionals than supply may lead to a talent crisis in the financial servies industry. How does one manage the “soft risk” that drives company culture, operations, and profitability? Is outsourcing the answer? Or, will companies need to get to the heart of what matters most to the employee: developing their capabilities, keeping them engaged in meaningful activity, and identifying other colleagues/mentors within the organization who will help them achieve their objectives.

1:00 p.m. – 2:00 p.m.	Lunch
2:00 p.m. – 3:30 p.m.	Session 3: Getting Started: Structuring a Robust Operational Risk Management Framework and Process for Your Company

There are growing signs that formalized operational risk management programs may become status quo within the insurance industry. However, as an industry, formalized processes around operational risk management remains relatively new as compared to what has occurred within the banking sector. Many insurers face the challenge of rationalizing the effort involved in designing, implementing and operating a formal process around operational risk that is integrated into an overall ERM framework. This session will demonstrate how industry trends associated with regulatory and compliance requirements along with drivers such as rating agency expectations and Solvency II can help build a compelling business case for a robust operational risk management program. The session will examine qualitative and quantitative elements of a successful program. Key features such as organizational structure, process maps, data, analytic techniques, technology, decision making, and reporting will be discussed.

3:30 p.m. – 4:00 p.m.	Networking & Refreshment Break
4:00 p.m. – 5:30 p.m.	Session 4: Connecting Operational Risk Management and Strategic Risk Management

Through the application of strategic risk management, an organization becomes better prepared to seize future opportunities and reduce the impact of unfortunate events. The planning process aligns strategies, goals, tactics, and resources. A market value impact of an operational event can be significant. Therefore, visualizing a set of potential operational event scenarios allows a company to determine how their operations should react to optimize a range of risk-adjusted outcomes. Effective operational risk management is essential to establishing effective strategic risk management. This session will discuss the strong connection between operational risk management and strategic risk management.

Wednesday, March 28, 2007—Workshop 2

Banks and Insurers: Separate Paths but a Common Destination—Practical Tools Shared Between Financial Service Industries

Gain insights you can use as experts from banking as well as life and casualty insurance share tools they are using as each industry moves towards ERM. The Basel Accord has encouraged bankers toward using company-driven ERM models for financial and non-financial risks to determine the minimum required regulatory capital. Insurers are using principles-based valuation models for the same reason. You just might discover that these same models can be used for calculating economic capital, pricing, performance measurement, and portfolio management at your company.

Facilitator:

Dr. Robert Mark, Black Diamond Risk Enterprises

Faculty:

Stephen D’Arcy, University of Illinois
Michel Crouhy, IXIS Corporate and Investment Bank
David Ingram, Standard & Poor’s
Dan Rosen, R² Financial Technologies
Max Rudolph, Rudolph Financial Consulting, LLC

8:00 a.m. – 9:30 a.m	Registration & Continental Breakfast
9:30 a.m. – 11:00 a.m.	Session 1: ERM Basics for Banks and Insurers

Presenters will define the problem of translation of risk management concepts that exist between the two industries. What are the goals? The discussion will include potential solutions and where more work is needed, as well as:

Definition and scope of ERM;
Benchmarking ERM from a policy, methodology, and infrastructure framework;
Why ERM is important—setting the context for ERM while discussing the drivers of change and development for the ERM discipline;
The impact of ERM on management practices: a discussion of recent ERM trends, including organizational objectives for pursuing ERM;
The role of ERM in value creation; and
The role of the Chief Risk Officer.

11:00 a.m. – 11:30 a.m.	Networking & Refreshment Break
11:30 a.m. – 1:00 p.m.	Session 2: Banking/Insurance Tools and Techniques—Building Blocks of Success

Get an overview of the techniques and tools used by banks. You’ll be introduced to the breadth and depth of technical issues surrounding measuring and managing risks at the enterprise level. In particular, our experts will explore:

Essentials of financial and operational risk management and the pitfalls of using a “silo” approach to risk management as well as superior risk management approaches in the policy, methodology, and infrastructure dimensions;
Key risk-based decisions that need to be made under uncertainty in an environment of sparse and fragmented data sources;
Risk-based business intelligence trends: top-down vs. bottom-up, and risk aggregation and issues in allocating risks back to the business units;
Economic capital as a measure of the combined risk position of an enterprise;
Case studies of failed ERM initiatives; and
Best practices and ERM frameworks.

1:00 p.m. – 2:00 p.m.	Lunch
2:00 p.m. – 3:30 p.m.	Session 3: Banking/Insurance Tools and Techniques-Building Blocks of Success

Please See Session 2 description

3:30 p.m. – 4:00 p.m.	Networking & Refreshment Break
4:00 p.m. – 5:30 p.m.	Session 4: Roundtable—What Have We Learned and Where Do We Go Now?

Get your burning questions about ERM processes between banks and insurers answered as a panel of experts from both businesses discuss commonalities of the ERM process between their groups. Questions will be taken from the floor, so be prepared!

Wednesday, March 28, 2007-Workshop 3

ERM Essentials for Decision Makers

Across industries, Enterprise Risk Management (ERM) is evolving into a catalyst for companies to increase transparency, safeguard shareholders’ interest, leverage opportunities to strengthen their competitive advantage and comply with government reporting regulations. Corporations are adopting ERM as the new form of corporate governance and a Better Business Practice. This workshop will offer participants comprehensive coverage of drivers, tools, techniques and current issues relating to this emerging discipline.

Workshop Faculty:

Michael Belfatti, Towers Perrin
Aaron Halpert, KPMG LLP
Chris Karow, CPA, Ernst & Young LLP
Hubert Mueller, Towers Perrin
Frank Sabatini, Ernst & Young LLP
Ashish Dev, KeyCorp

8:00 a.m. – 9:30 a.m.	Registration & Continental Breakfast
9:30 a.m. - 11:00 a.m.	Session 1: Lecture: ERM Fundamentals

Join the first lecture session of this intensive workshop to hear industry experts discuss essentials and trends impacting the emerging practices of Enterprise Risk Management. Specifically, experts will explore:

Definition and scope of ERM
The important factors that are driving the spread of ERM and how ERM is changing and developing
The impact of ERM on management practices including organizational objectives for pursuing ERM
ERM’s role in value creation
Role of the Chief Risk Officer

11:00 a.m. – 11:30 a.m.	Networking & Refreshment Break
11:30 a.m. - 1:00 p.m.	Session 2: Case Study: Critical Factors in ERM Implementation

You have implemented SOX 404 - so why do you need ERM? Beware of rushing into ERM risk analytics unprepared or applying checklists. Even the most sophisticated risk measurement technology will not meet stakeholders’ objectives if mechanically adopted without professional judgment. Creating a culture that embraces ERM will result in risk management decisions that increase economic value for a chosen risk appetite and time horizon. In this session you’ll learn about critical elements of a successful ERM framework. Experts will discuss:

Requirements for supportive internal environment
Up the organizational ladder with ERM
Critical organizational issues, alignment of incentives and responsibilities
The difference between Sarbanes-Oxley and ERM
Controlling and monitoring activities
Effective execution - the difference between an extra expense and invaluable resource
Case studies of failed ERM initiatives
Best practices and ERM frameworks

1:00 p.m. - 2:00 p.m.	Lunch
2:00 p.m. - 3:30 p.m.	Session 3: ERM Tools and Techniques— Building Blocks of Success

Increase your knowledge with the techniques and tools involved in the ERM process. You’ll be introduced to the wide range of technical issues surrounding measurement and management of risks at the enterprise level. Experts will probe:

Essentials of market, credit, operational and insurance / hazard risks, and the pitfalls of using a “silo” approach to risk management on the company bottom line
Decision-making issues under uncertainty with sparse and fragmented data sources, and business intelligence trends
Top-down vs. bottom-up. Risk aggregation and issues in allocating risks back to the business units
Economic capital as a measure of the combined risk position of an enterprise
Controlling and monitoring activities
Case studies of failed ERM initiatives
Best practices and ERM frameworks

3:30 p.m. – 4:00 p.m.	Networking & Refreshment Break
4:00 p.m. - 5:30 p.m.	Session 4: Case Studies: ERM Implementation

Take a look at a hands-on example focused on dealing with issues associated with creating a successful ERM framework. Building on the essential concepts addressed earlier in the day, the case study will provide practical answers to issues arising in this process. Expert panelists will cover:

Differences in ERM awareness across different industries
Elements of systems and data requirements
Infrastructure issues
Sample risk metrics report
Understanding the behavioral and market drivers of poor decision making regarding risk
Exploiting risks through diversification