Financial and regulatory risk

Financial Risk Management professionals help your organization enhance its performance, enable better decision-making and satisfy compliance demands. They do this by shaping your risk strategy, improving risk-adjusted performance and implementing pragmatic recommendations. The Financial Risk Management team provides deep industry knowledge, insightful opinions and technology-enabled delivery to help refine your processes, governance and strategy to address financial and operational risks and improve business performance. Our solutions relate to your sector and focus on a number of sector issues in which we can help by using our unique approach to management techniques. These solutions are:

Our risk experts will provide you with wide-ranging support in developing, validating, managing and implementing all kinds of risk models. The main drivers for this service are the demanding regulatory expectations for banks to have top-notch credit risk, market risk and operational risk models in place in order to maintain sound risk management.

Headlines surface almost daily about the quality of the data financial institutions use in the reports they file with the regulatory authorities. Yet, these questions serve to highlight challenges that have been long-standing, including large numbers of manual reconciliations, data integrity issues, systems limitations, analytical challenges, resource and time constraints and governance weaknesses. We help you make regulatory reporting accurate, efficient and future proof.

For many years the valuation of financial instruments has been an evergreen in our services. In collaboration with our German Competence Center iRadar, we offer these services across all sectors (public sector, corporates, banks, insurance companies, etc.). The impact of the financial instruments accounting standard IFRS 9 is most significant for financial institutions. We help you to better understand the effects and how to manage them in an optimal way.

Supervisors (ECB, NBB) regularly assess and measure the risks for each bank, called the Supervisory Review and Evaluation Process, or SREP. It summarizes all the supervisor’s findings of a given year and gives you “homework.” In the SREP decision, which the supervisor sends to the bank, key objectives are set to address the identified issues. You must then “correct” these within a specific time. That is when you should call KPMG FRM for help.

Risks are often assessed through parallel and often overlapping frameworks, resulting in a proliferation of methodologies and inefficiencies. In most cases, the supporting technology infrastructure has not kept pace with changes in the risk function. We review the risk frameworks created and strive to consolidate them into a single, holistic, integrated framework encompassing all risks in a pragmatic way.

Our teams are ready to support you with the integration of ESG / climate-related risks in your risk management framework, which is and will remain a focus area for the regulator in the short/mid term. We can guide you in conducting gap assessments against regulatory requirements / leading practices and materiality assessments on your activities which will help you setting the right priorities.

For these risks, we can support you with the definition and implementation of a robust risk management framework, starting with the definition of an adequate governance (setting responsibilities), the definition of a risk appetite towards ESG (reflecting your overall strategy), and the development of measurement approaches to monitor your exposure to these risks (incl. scenario analysis as stress testing).

Via our international network we provide you with insights on such leading practices which will help you identify the approach proportionate to your needs.

Our teams support you in recovery and resolution planning to improve your governance, your capital structure as well as drafting and enhancing your different playbooks (e.g. recovery, bail-in, sales-of-business). We can act as an independent valuer and assist you in upgrading the management information system to ensure timely availability of data. Furthermore, our experts benchmark your preparedness for operational continuity. 

Regulatory compliance is a prerequisite to obtaining a license to operate in the financial sector (banks, insurance companies, asset managers, payment service providers, etc). Financial sector actors, therefore, have no choice but to invest in compliance, so as to avoid increasing reputation risk, (C-level) liability risk and potentially huge financial penalties. Our aim is to couple our strong compliance expertise with pragmatic and (cost) efficient solutions, based on a profound understanding of your business. To this end, we are developing a truly transversal KPMG Solution, with embedded technology, so as to accompany you on your way to Regulatory driven transformation.

Strategic and/or operational assessment of the “current state” against the “to be,” from a requirements, governance and resources perspective.

• Considers the markets that you operate in, the value proposition and the clients and channels used to deliver the offering to assess upcoming limitations and/or opportunities.
• Identifies and assesses impact on supporting infrastructure, processes, governance and people that enable you to comply with regulatory obligations.
• Risk assessments.

Assisting you in the strategic approach to designing compliance governance, controls, policies, procedures and processes to coordinate efforts, eliminate silos and recognize synergies.

• Build levers for a compliance culture.
• Redesign transversal processes and supporting RACI, including outsourcing strategies.
• Design the optimal compliance control framework.
• Design target IT infrastructure and technology enablers.

Assisting you in designing and implementing revised compliance policies, procedures, processes and controls

• Drafting of policies & procedures, training materials, etc
• Project and program/management
• Internal and external stakeholder management (e.g. regulators)
• Implementation of compliance metrics and reporting
• Assurance/attestations

Assisting you in selecting and implementing technologies that align with the organization’s compliance strategies, ultimately reducing costs and improving performance, agility and effectiveness

• Data visualization
• Building predictive analytical models for proactive identification of opportunities, issues and risks, e.g. scenarios and models for transaction monitoring based upon prior data results (machine learning) or Robo Advice
• Intelligent automation of processes and controls