Jamaica’s Financial Institutions Under Scrutiny: Effective Risk Management Crucial for Stability
Jamaica’s financial institutions play a vital role in the country’s economic growth, making effective risk management an increasingly crucial aspect of their operations.
Proactive Risk Management at CRMD
The Corporate Risk Management Department (CRMD) at one prominent institution is taking proactive steps to ensure that risks are identified, measured, and managed effectively. According to Odean White, Chief Risk Officer, the CRMD supports the Board and Management in designing and implementing risk management strategies tailored to the bank’s business model and activities.
Engaging “Risk Owners” and “Risk Champions”
The department engages “risk owners” and “risk champions” across the organization to develop and deploy risk management strategies, policies, procedures, and systems. This collaborative approach ensures that risks are managed within prescribed tolerances and fosters a positive risk culture throughout the organization.
Scope of Work
The CRMD’s scope of work is broad, encompassing financial, non-financial, and compliance risks that could impact the institution’s operations. To achieve this, the department coordinates processes to:
- Identify risk exposures
- Measure and monitor risk levels
- Control or mitigate intolerable risk exposures
- Treat and report on risk exposures
Contemporary Risk Management Practices
The CRMD employs contemporary risk management practices and standards, utilizing risk measurement methodologies and conducting periodic risk assessments of key risk exposures and indicators. The department works closely with business units and management-level committees to ensure that controls are in place and robust monitoring mechanisms are implemented to treat intolerable risk exposures.
Reporting and Governance
Regular updates are provided on the implementation of risk management policies and treatment plans for key risks relative to the bank’s risk appetite and tolerance levels. Quarterly reports are also submitted to the Risk Management Committee, chaired by the Senior Deputy Governor, as well as periodic reports to other relevant committees.
Compliance with International Standards
The CRMD subscribes to international standards adopted by the Bank, including:
- ISO 31000:2018 (Risk Management – Guidelines)
- ISO 22301:2019 (Business continuity management systems – Requirements)
The department is guided by recognized professional organizations’ standards and codes of conduct, ensuring a high level of professionalism in its risk management practices.
Model for Effective Risk Management
As Jamaica’s financial institutions navigate the complexities of risk management, the CRMD at this institution serves as a model for effective risk management practices. By identifying, measuring, and managing risks effectively, these institutions can ensure stability and continued growth in the country’s economy.