Approach (PRISM) and Risk Trends - Step Guernsey...Approach (PRISM) and Risk Trends Presentation to...

The GFSC’s Regulatory

Approach (PRISM)

and Risk Trends

Presentation to STEP

12 September 2016

Neil Pailing & Eamonn Finnerty

Copyright of Guernsey Financial Services Commission

Presentation Overview

• GFSC Regulatory Approach

• Risk Trends

• Insight into Enforcement Cases


Why do we need Risk Based Supervision?

• Optimised allocation of resources based on a combination of the impact of a firm on the Bailiwick and its risk probability.

• Ensure that we have the right engagement levels with supervised entities.

• Increased structure, consistency and transparency for supervisory activities.

• Alerts to help supervisors detect any deviation from normal activity.

• Help supervisors make structured judgements about the risks a firm poses.

• Ensure risks are mitigated, with progress tracked.


PRISM

2nd September, 2016

PRISM

OperatingPlatform

OnlineServices

DataManagement

Risk BasedSupervision


Online Submissions

Copyright of Guernsey Financial Services Commission 5

Definitions

• Impact – The degree of damage that a licensee, fund,

registered entity or group, could cause to its consumers,

the financial system in the Bailiwick and elsewhere, the

Bailiwick economy and the public were it to (a) fail; or

(b) fail to observe proper standards of conduct.

• Probability risk - Is the likelihood of a problem

occurring.


Supervision under PRISM

Riskmitigation

Programme

Internal challenge-

RGP

Assess riskprobability

Engagement level

Impact category

• Check outcomes• Re-assess firm

Trig

ger

Thematics


Impact and Engagement Levels

Engagement Level

High

Medium High

Medium Low

Low

Firm Impact

Continuous Assessment

Full Risk Assessment

Risk Assessment

Thematic &

Trigger

based

supervision


Probability Risk

Strategy /

Business

Model Risk

Governance

Risk

Conduct RiskOperational

Risk

Financial

Crime RiskCredit

Risk

Market

RiskCapital

Risk

Liquidity

Risk

Insurance

Risk

Environmental

Risk


Risk Mitigation Actions – Top 5

Risk

Mitigation

Actions:

Financial

Crime

Risk

Mitigation

Actions:

Operational

Risk

Mitigation

Actions:

Governance

Reactive Supervision

• Applies to all firms, particularly pertinent to the

supervision of low impact firms

• Some examples of triggers:

• From the firm – regulatory return

• From a customer – complaint

• From other external sources

• From Financial Crime Supervision & Policy

Division – e.g. following an AML/CFT visit

Reactive Supervision – Top 5 Types

Fiduciary Duty in

respect of Tax advice

Client Money/Assets

Data Security RATS/ Pensions

Outsourcing Trustee

Investment Duty

Financial Resources

Requirement

Client Take On


Potential Thematic Reviews

17

15%

23%

31%

8%

8%

15%

Enforcement Case Outcomes

Licensee Fine

Individual Fine & Prohibition

Licensee Fine & Conditions

Licensee Fine & Conditions &Individual Fine and Prohibition

Licensee Fine &Individual Fineand Prohibition

No Sanctions Imposed

18

39%

15%8%

38%

Completed Enforcement Cases Per Sector

Insurance

Investment

Banking

Fiduciary

19

8%

23%

31%

38%

Types of Enforcement Cases

AML/CFT

Conduct

Corporate Governance &AML/CFT

Corporate Governance &Conduct

Observations

• Really ‘know your client’

• CDD at the heart of the business

• Embedded compliance culture

• Risks understood, measured, managed and mitigated

• Collective understanding and knowledge in business

• Good governance is key

Any questions?

21

Approach (PRISM) and Risk Trends - Step Guernsey...Approach (PRISM) and Risk Trends Presentation to...

Documents

Transcript of Approach (PRISM) and Risk Trends - Step Guernsey...Approach (PRISM) and Risk Trends Presentation to...