GFRC: Bringing critical functions together

Post-mortems of the financial crisis concluded that certain practices had infected banks with a near-fatal case of myopia. Each segment, or silo, within an organisation – whether a business or product line, geographic jurisdiction or category of risk – was the master of its own limited domain; no one was clearly and unambiguously responsible for assessing the big picture as far as risk and performance were concerned. A holistic approach to Governance, Finance, Risk and Compliance (GFRC), can help banks looking to combat antiquated organisational structures and technology, adapt to the new regulatory landscape.

Foremost among the responses to the financial crisis was Basel III, the governance guidelines proposed in 2010 by the Basel Committee on Banking Supervision, revised and expanded since then and in the process of being implemented worldwide. Beyond Basel III, institutions must contend with European Union initiatives, including the latest iteration of the Capital Requirements Directive (CRD IV); the Markets in Financial Instruments Directive (MiFID), for investment services; the European Market Infrastructure Regulation (EMIR), covering derivative instruments, etc. Firms are also implementing principles revised by the International Accounting Standards.

How to mitigate cyber risks

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One of the focal points at the SIA Expo conference in Milan was cybersecurity. Coen Voormeulen, chairman of CPMI (formerly CPSS), the cybersecurity working group at the Bank of International Settlements, kicked off the discussion by suggesting that 'cybersecurity threats are evolving' and that 'they can come from a variety of sources'.