Three lines of defense-Failed promises and what comes next

LONDON/NEW YORK(Starling for Thomson Reuters Regulatory Intelligence) – *To read more by the Thomson Reuters Regulatory Intelligence team click here: bit.ly/TR-RegIntel

A man dressed as a city gentleman walks across a tightrope in London’s financial district November 12, 2008. REUTERS/Stephen Hird (BRITAIN)

ORX, the financial industry trade group for operational risk leaders, recently reported a sharp decline in non-financial risk related loss incidents reported by its member banks over the past three months.[1] While it is possible that banks have universally embraced higher business standards and risk controls – amidst one of the most challenging business environments in history – we find alternative explanations more convincing. These range from the benign (e.g., a reduction in business volumes) to the more worrisome: that existing risk reporting systems are simply failing to cope with “the new normal” and that risk events are going unreported and — worse — undetected altogether.

MANAGEMENT MODEL

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