Integrity Risk Appetite: A key pillar in the strategy of financial institutions | Operational Risk | Deloitte

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Integrity Risk Appetite: A key pillar in the strategy of financial institutions

Optimising integrity risk management in 6 steps

The Dutch Central Bank (DNB) is increasingly focusing on integrity risk management methodologies applied by financial institutions. DNB found that many financial institutions are not able to explicitly state how they have configured their integrity risk appetite and/or for what purpose the statement is used within the organisation. Download the article to learn how Deloitte can help your organisation to change this and use a clear integrity risk appetite to optimise your integrity risk management.

Integrity risk appetite

DNB has conducted an exploratory research to assess in how far financial institutions explicitly stated an integrity risk appetite, and whether these institutions decided consciously on how to deal with a variety of integrity risks that are relevant to their business model. DNB found that many financial institutions are not yet able to explicitly state how they have configured their risk appetite and/or for what purpose the statement is used within the organisation.

Integrity Risk Appetite: A key pillar in the strategy of financial institutions

Laws and regulations

Financial institutions are exposed to many forms of integrity risk, ranging from money laundering to cybercrime and socially unacceptable behavior. Financial institutions strive to execute their business with the highest level of integrity, while being compliant with all applicable laws, regulations and standards in the different markets and jurisdictions in which they operate, such as The Netherlands Financial Supervision Act (Wft) and the Netherlands Money Laundering and Terrorist Financing Prevention Act (Wwft).

Strengthening your organisation

An integrity risk appetite statement can strengthen the position of the financial institution concerning integrity risks and helps in being compliant with the applicable laws and regulations. Furthermore, a key strength of an explicit integrity risk appetite is the possibility to align the pursued strategic objectives of your organisation with your risk appetite. The integrity risk appetite gives the opportunity to reduce complexity in the client portfolio and to standardise certain controls and processes for example. By setting clear boundaries that employees have to respect when pursuing the strategy of the organisation, integrity de-risking of the client portfolio can be achieved.

Risk powers performance

Ideally the integrity risk appetite of a financial institution should directly link to the risk management, policies & procedures and reporting. Furthermore, it is the baseline for the Systematic Integrity Risk Assessment (SIRA) as part of (integrity) risk management within financial institutions. If implemented successfully, the integrity risk appetite can manage and monitor the integrity risks explicitly in your organisation. In this way, certain levels of integrity risks can be accepted, others can be eliminated. After all, risks bring opportunities if managed effectively. Risk powers performance.

More information?

For successful developing, implementing and monitoring the integrity risk appetite, Deloitte uses a proven 6 step approach explained in the accompanied article. Want to have more information this? Please contact Christiaan Visser via chvisser@deloitte.nl / +31 (0) 88 288 54 28.

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