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Transcript of Risk-based Supervision Solange Berstein Chair IOPS Technical Committee Superintendent Pension...
Risk-based Supervision
Solange Berstein Chair IOPS Technical CommitteeSuperintendentPension SupervisorChile
Agenda
1. Motivation2. Comparing Two Supervisory Models3. Working Plan4. Defining the Objective5. Supervision Process
I. KnowledgeII. Assessment III. Follow up
6. Where are we now?
RBS Main Objectives
EXPECTED OUTCOMES
Preventive approach Encourage prudential administration of supervised
entities Focus on what is important and not the urgent Learning by doing of supervisory activities
RBS Main Benefits
EXPECTED BENEFITS
Better visibility of the areas with greatest risks More effective control measures and supervisory activities Reduce claims from members Alignment with international standards of regulation Disclosure and transparency to the market
Main Changes: Comparing Two Supervisory Models
Supervision by Compliance Risk Based Supervision
Focus Reactive Preventive
Priorities All subjects Priority to most critical and poorly evaluated areas
Resorces allocation Less flexibility More flexibility
Transparency Lack of knowledge of the regulator’s concerns
Make explicit the mayor concerns
Supervisors Orientation to verify compliance with norms
Enchanced analytical capacity judgment call is required
Working Plan
2005
•Get familiar with RBS
2006
•Diagnosis
2007
•Design
2008
•Development of framework legislation
2009
•Revision of methodology and improvement of supervision guides
•Staff training (which included a visit to APRA)
2010
•Pilot implementation
Defining the objetive
• To build the model it is necessary to have clear the objective
• For the Superintendence of Pensions in Chile the main focus for Supervision was defined to be: Fiduciary Responsability of Managers
SUPERINTENDENTSUPERINTENDENT
INTENDENTOF SUPERVISION
INTENDENTOF SUPERVISION LEGAL DIVISIONLEGAL DIVISION INTENDENT OF
REGULATIONINTENDENT OF
REGULATION
FINALCIALDIVISIONFINALCIALDIVISION
BENEFITSDIVISIONBENEFITSDIVISION
CONTROL DIVISIONCONTROL DIVISION
MEDICALDIVISIONMEDICALDIVISION
REGULAIONDIVISION
REGULAIONDIVISION
CUSTOMERS SERVICE DIVISION
CUSTOMERS SERVICE DIVISION
STUDIESDIVISIONSTUDIESDIVISION
IT AND ADMINISTRATION
IT AND ADMINISTRATION
SUPERVIZED ENTITIESSUPERVIZED ENTITIES REGULATED SYSTEMSREGULATED SYSTEMS
LEGAL CONTROLLEGAL CONTROL
Organization Structure of Supervisor
SUPERINTENDENTSUPERINTENDENT
INTENDENTOF SUPERVISION
INTENDENTOF SUPERVISION LEGAL DIVISIONLEGAL DIVISION INTENDENT OF
REGULATIONINTENDENT OF
REGULATION
FINALCIALDIVISIONFINALCIALDIVISION
BENEFITSDIVISIONBENEFITSDIVISION
CONTROL DIVISIONCONTROL DIVISION
MEDICALDIVISIONMEDICALDIVISION
REGULAIONDIVISION
REGULAIONDIVISION
CUSTOMERS SERVICE DIVISION
CUSTOMERS SERVICE DIVISION
STUDIESDIVISIONSTUDIESDIVISION
IT AND ADMINISTRATION
IT AND ADMINISTRATION
SUPERVIZED ENTITIESSUPERVIZED ENTITIES REGULATED SYSTEMSREGULATED SYSTEMS
LEGAL CONTROLLEGAL CONTROL
Organization Structure of Supervisor
SUPERINTENDENTSUPERINTENDENT
INTENDENTOF SUPERVISION
INTENDENTOF SUPERVISION LEGAL DIVISIONLEGAL DIVISION INTENDENT OF
REGULATIONINTENDENT OF
REGULATION
FINALCIALDIVISIONFINALCIALDIVISION
BENEFITSDIVISIONBENEFITSDIVISION
CONTROL DIVISIONCONTROL DIVISION
MEDICALDIVISIONMEDICALDIVISION
REGULAIONDIVISION
REGULAIONDIVISION
CUSTOMERS SERVICE DIVISION
CUSTOMERS SERVICE DIVISION
STUDIESDIVISIONSTUDIESDIVISION
IT AND ADMINISTRATION
IT AND ADMINISTRATION
SUPERVIZED ENTITIESSUPERVIZED ENTITIES REGULATED SYSTEMSREGULATED SYSTEMS
LEGAL CONTROLLEGAL CONTROL
Organization Structure of Supervisor
1. Knowledge
2. Planification
3. Assessment4.
4. Documentation and Actions
5. Comunication
6. Follow Up
• Directors Committee• Supervisory Committee• Intendent of Supervision• Financial, Control and Benefits
Divisions• RBS coordinator• Regulation Division, Studies
Division and Customers Service Division
• Supervisory Committee• Intendent of Supervision• Financial, Control and Benefits
Divisions
• Intendent of Supervision• Financial, Control and Benefits
Divisions• Supervisory Committee• Sanctions Committee• Legal Division
• Directors Committee• Legal Division
• Supervisory Committee• Financial, Control and Benefits
Divisions
Supervisory Process
Knowledge
• The main activities and elements required are:
Information gathering;
Information analysis;
On-site visits;
Integrated information system.
Planification
Directorio 0 0 0Aptitudes e idoneidad del Directorio 3 3 3Funcionamiento del Directorio y de los Comités de Directorio 3 3 3Definición y seguimiento de la política global de gestión de riesgos 5 5 4Definición de la Estrategia 3 3 3Política de Divulgación y Transparencia 6 6 4Gestión del Riesgo Reputacional 2 2 2Administración 0 0 0Composición y Estructura de la Administración. 3 3 3Proceso de Planificación y Administración. Divulgación y Transparencia. 4 4 4Sistemas de Información de Gestión 2 2 2Gestión de Riesgos 0 0 0Cultura de Gestión de Riesgos 5 3 3Gestión del Riesgo de Cumplimiento 3 3 3Gestión de Riesgo Fiduciario 3 3 3Riesgo Financiero 0 0 0Riesgo del Proceso de Inversiones 5 3 5Riesgo de Crédito 3 3 3Riesgo de Liquidez 2 2 2Riesgo de Mercado 2 2 2Riesgo de Solvencia de la Entidad 2 2 2Riesgo Operacional 0 0 0Riesgo en la Relación con los Afiliados 3 3 3Riesgo de Gestión de Cuentas 3 2 3Riesgo de Beneficios 2 2 2Continuidad de Negocio y Recuperación de Desastres 3 3 3Riesgo de Subcontratación 4 4 3Riesgo Tecnológico 3 3 3
Regular Supervision
Preventive Inspection
Compliance Supervision
Risk Matrix
Assessment: Industry Risk FactorsÁrea Criticidad Evaluación
DirectorioAptitudes e idoneidad del Directorio A,B,C 1...6Definición y seguimiento de la política global de gestión de riesgos A,B,C 1…6Funcionamiento del Directorio y de los Comités de Directorio A,B,C 1...6Definición de la Estrategia A,B,C 1...6Gestión del Riesgo Reputacional A,B,C 1...6Política de Divulgación y Transparencia A,B,C 1...6AdministraciónComposición y Estructura de la Administración. A,B,C 1...6Proceso de planificación, administración, divulgación y transparencia. A,B,C 1...6Sistemas de Información de Gestión A,B,C 1...6Gestión de RiesgosCultura de gestión de riesgos A,B,C 1...6Gestión del Riesgo de Cumplimiento A,B,C 1...6Gestión de Riesgo Fiduciario A,B,C 1...6Riesgo OperacionalRiesgo en la Relación con los Afiliados A,B,C 1...6Riesgo de Gestión de Cuentas A,B,C 1...6Riesgo de Beneficios A,B,C 1...6Riesgo Tecnológico A,B,C 1...6
Continuidad de Negocio y Recuperación de Desastres A,B,C 1...6Riesgo de Subcontratación A,B,C 1...6Riesgo FinancieroGestión del Riesgo de Mercado A,B,C 1...6Gestión de Riesgo de Crédito o Contraparte A,B,C 1...6Gestión del Riesgo de Liquidez A,B,C 1...6Gestión del Riesgo de Solvencia de la Entidad A,B,C 1...6
Assessment: Global Scoring
• A global scoring is assigned to every supervised entity taking into consideration the inherent risk of each area, sub-area within the entity and the quality of controls for each inherent risk.
So, the global scoring combines the significance weights and the assessment of control quality.
• The global scoring takes values between 1 and 5. A score equal to 1 → lowest net risk A score equal to 5 → highest net risk
• The risk matrix looks at: The risk level Controls’ quality Global scoring Change in evaluation over time
Communication• A summary document is given to the entity with
the opinion of the Supervior: Strengths and Weaknessess Global Scoring Recommendations with priorities
• The Superintendent and intendent of supervision meet with the board
• When there is a sanction this is also communicated to the entity
Follow up
• An end-product of the assessment efforts
• Main activities, varying intensity according to necessity: Monitoring and general follow-up On-site inspections focused on specific topics Action Plans with the objective of improve weak points Integral on-site inspections according to a predefined
supervision plan Periodic meetings with main executives and board of
directors Intervention in specified cases of insolvency.
Challenges throughout the process
• Building the model: important to have clear which is the goal• Getting supervisors familiar and to finally be owners of the
model• Make the industry accept and acknowledge the importance
of the new approach of supervision• Changes on the structural organization of the supervisory
agency• Implementation in parallel to the traditional activities of
supervision• Integrating all the activity of the Supervisory entity within
the RBS approach
Where are we now?• Risks of five of the six pension fund managers have been
assessed.• Risks for the unemployment insurance managers were also
assessed.• The model for the public pension provider is being build.• The superintendence is doing the following up of the
recommendations that came out from the assessments.• A number of areas of each pension fund were reviewed with
a preventive approach• The risk matrix is being updated with the information from
the follow up process and the preventive evaluations by area