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Financial Risk Management in Israel: A Guide to Effective Risk Management

In today’s fast-paced business environment, companies in Israel are faced with a myriad of risks that can threaten their very existence. From market volatility to cyber attacks, these risks can have devastating consequences if not properly managed. That’s why financial risk management is crucial for businesses operating in the country.

The COSO ERM Framework: A Guide to Effective Risk Management

In 2017, the Committee of Sponsoring Organizations (COSO) published a comprehensive framework for enterprise risk management (ERM). The framework outlines five key components that organizations should adopt to ensure effective risk management:

Governance and culture
Strategy and objective setting
Performance, review, and revision
Information, communication, and reporting

By adopting this framework, companies in Israel can implement effective tone at the top, establish oversight responsibilities, define a risk appetite aligned with business objectives, prioritize risks, and continuously obtain and share necessary information.

Integrated Risk Management Programs

Adopting integrated risk management programs allows organizations to manage various types of risks using a common language. This enables the allocation of appropriate resources for optimal management and oversight over different components, including:

Operational risks
Strategic risks
Fraud risks
Financial integrity risks
Compliance risks
Data privacy risks
Information security risks
Legal risks
Macroeconomic risks

Enterprise Risk Management in the Financial Services Sector

The financial services sector in Israel operates in a complex regulatory environment, with multiple requirements for ERM outlined by the Bank of Israel, Capital Market, Insurance and Savings Authority, and Israel Securities Authority. As a result, financial institutions have developed a hybrid approach for ERM that combines risk analysis with capital planning and internal capital adequacy assessment process (ICAAP).

Designing Comprehensive Enterprise Risk Management Frameworks

Our team can help companies in Israel design comprehensive enterprise risk management frameworks that include:

Risk surveys
Policy documents
Risk appetite policies
And more.

We can also assist with the implementation of IT systems designed for ERM or ERM-related purposes.

Financial Risk Management and Modelling

We advise financial institutions on:

Credit risk management
Market and liquidity risks
Development and validation of financial risk models in accordance with model risk management and validation principles issued by the OCC and Bank of Israel.
We can also assist companies in adopting international regulations mandating risk management, such as Basel and Solvency.

Emerging Risks

Our team can help identify and analyze emerging risks using stress scenarios and effective reports. We can also conduct risk assessments that consider:

Climate risks
Environmental risks
- Physical risks
- Transition risks

Crisis Management

In the event of a crisis, our team can assist companies in Israel with formulating appropriate crisis readiness programs based on stress scenarios. We can also help develop robust plans to recover from crisis events using agile business processes and controls, informed by root-cause analysis and lessons learned.