BANKING UPDATE FOR EASTERN CONNECTICUT

CHAMBER OF COMMERCEJED Consulting Services

Agenda

Key updates on Risk Management and environment

Brief recap of Enterprise and components Risk Appetite

Consulting approach- What we see is happening across the country and in industry

Real world perspective—How you can develop your program

Where we are: Current Issues

Global economic crisis Credit crisis Liquidity and capital crunch Chaotic market

Governmental Capital Injections

Where we are Current Issues

Changing Regulatory Environment Increasing expectation Regulatory investigations and enforcement

actions Cost of compliance

Reputation Risk Bank Failures/Receiverships Shareholders/Analysts/Investors/Customer

Corporate Accountability

Expectations for Director Oversight of Risk Management is Rising

Regulatory Expectations Federal Sentencing Guidelines Listing standards Rating Agencies now focusing on ERM

practices

Regulatory Concerns

Operational Risks vs credit risk

External Risks

Regulatory/Legal Investor relations Competitor Financial markets Catastrophic loss Soveriegn/Political

Information Risks

Product/Service Pricing Performance Measurement Budget and Planning Accounting information Financial reporting

Technology Risks

Access Availability Infrastructure

Financial Risk

Price Liquidity Credit

Integrity risk

Ethics Fraud Unauthorized use Reputation

Strategic Risk

Leadership Alignment Planning Communication Business Model

Global Risks: Economic Risks

Asset price collapse Extreme commodity, consumer and

energy price volatility Fiscal crisis Global imbalances and currency volatility Liquidity/credit crunch Regulatory failures Retrenchment from globalization Slowing Chinese economy

Geopolitical Risks

Corruption Fragile states Geopolitical conflict Global governance failures Illicit trade Organized crime Space security Terrorism Weapons of mass destruction

Enterprise Risk Management

Is a process designed to identify potential events that may affect entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.

KEY DEFINITIONS

ERM Philosophy Value entity seeks influences how it is applied

Risk Appetite Related to strategy and qualititative or

quantitative Risk Culture

Shared attitudes, flows from philosophy appetite and subcultures

ERM Governance-Top Down Approach

Strategic Objectives A high level goal aligned with mission

Events An incident or occurrence originating from

internal or external sources Influencing Factors

External and internal Event identification

Methods and techniques to recognize activities and measure impact throughout the organization

Risk and Performance Management

Understand key risk areas of company Review company’s approach to managing

risk and evaluate processes in place to monitor and control those risks

Document extent executive management comprehend and consider risks

Risk and Performance Management

Understand fraud risks and ensure management have implemented adequate controls to mitigate fraud

Understand how costs of compliance are evaluated to help improve performance

Weigh in on strategy and risk

Some Risk Events to consider

How do you capture risk events Do we know the unknowable events that

could impact our enterprise

How to identify major themes

Market Strategic Operations

Market Risks

Macro economic Customer economics Financing Competition Consolidation

Strategic

Right Solutions Business Model Brand and Marketing Growth Acquisition Organization design and resources

Operations

Facilities Business Disruption Policies and procedures Decision making Systems capabilities Authorization Cost and efficiencies Customer service

Risk: Strategic

Business Model Our business model may not meet the needs of

our customer and markets ,nor achieve the profitability and growth goals that we have established .

Risk: Financial

Margin We are unable to sell our products and solutions

at sufficient profit margin due to competitive pricing pressures and increased costs

Risk: Operations

Contracting The contract demands from our customer may

become more and more complex, impacting our ability to meet their demands as well as properly bill and collect

Customer service We may not be able to fulfill our customer

expectations and/or provide quality customer service and be expensive

Risk : Market

Financing Customers may be unable to obtain financing

for our solutions Industry consolidation

Consolidation in our industry may allow our competitors gain market share, reduce costs and hire talent from our company

Product Innovation Competitors may introduce new solutions to the

market disrupt our value proposition significantly.

Do we have a risk appetite statement

Why JED Consulting? Business Continuity Plan

JED Consulting experienced IT professionals apply a risk-based impact analysis to advise on development, implementation, and maintenance of a comprehensive Business Continuity Plan is tailored to meet the needs of your organization

Why JED Consulting? Network Security Review

JED Consulting’s experienced IT professionals can conduct a complete and cost-effective analysis of your network security and provide prescriptive recommendations

Why JED Consulting: Network Security Review

Test internally takes place at your location and externally by using our state-of-the-art test lab

Utilize industry leading evaluation tools, testing is designed to discover weaknesses in the network components that protect the network from external and internal threats and vulnerabilities