advanced capability solutions - conduct risk

Conduct Risk Delivering Advanced MI and Predictive Analytics

Risk Solutions Practice 2015

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Conduct Risk – The Current State of Play

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FCA Position

The FCA have not set out a definition of conduct risk, or a clear agenda for the progress it expects to see from the industry. There is still no blueprint for firms to follow but fines for poor conduct are mounting. The Regulator is itself investing in state of the art MI and analytics capability and has reminded us that “technological sophistication is not simply a weapon. It is one of our most important defences” (Martin Wheatley, former CEO – FCA June 2014).

Industry forums have however suggested that the regulator is expecting:

Clear evidence that the firm is taking conduct and culture issues seriously, addressing them and making real and sustained progress.

A continuous flow of meaningful information up and down and across the firm.

Any decision taken within the firm, at any level, takes into account the potential impact on clients or the market.

Our Observation

Conduct risk continues to be a priority for regulators. Many firms have now made good progress in the development of their conduct risk strategies and frameworks. Global systemically important financial institutions (G-SIFIs) appear to be leading the pack in terms of effort, however much work is still needed in operationalising their conduct agendas.

A key challenge firms continue to face is the embedding and demonstrating of effective conduct risk management. Many are struggling to assess the best approach to embed the measurement and evidencing of conduct culture and effectively predict conduct outcomes.


The Industry Problem - Operationalising Strategy

Financial Institutions are struggling to operationalise their conduct risk agendas and take practical steps forward in developing the Advanced MI and Predictive Analytics insight needed to support, evidence and predict conduct risk outcomes.

In addition, the regulatory centric focus many firms are adopting typically misses the opportunity to capitalise on the increased revenues and improved business performance that can be realised by driving the conduct agenda through the eye of the customer.

The below illustrates some of the barriers to resolution:

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Conduct risk drivers challenge organisation-wide internal structures

How conduct risk aligns with existing operational risk / GRC frameworks

Corporate and employee behaviours can be difficult to control and measure

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1 Availability of the diverse skills and thinking needed to tackle the problem

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The need to access and control multiple internal and external data sources 3

Knowledge of the state-of-the-art technologies available to underpin capability


The Solution – A Smart Approach to Operationalistion

ACS have created a smart, practical approach and set of management practices that:

1. Realise immediate conduct risk value 2. Accelerate the operationalisation of your conduct risk strategy, frameworks and policies 3. Deliver Advanced MI / Predictive Analytics insight that satisfies the regulator and drives revenues and performance.

Our approach will help you in multiple ways:

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Improve regulatory confidence by demonstrating pre-emptive evidence of a positive organisation culture

Accelerate understanding of your existing data and delivering Advanced MI / Predictive Analytics quick wins

Deliver insight that protects reputation, enhances customer outcomes and also drives business performance

Align all MI to the purpose, values and target conduct risk outcomes of an organisation

Identify your organisation’s conduct risk touchpoint's and the MI metrics to evidence and predict conduct outcomes

✓ Quickly benchmark your conduct risk progress against industry peers and the FCA’s conduct supervision principles

Harness strong knowledge of state-of-the-art, leading and bleeding edge technologies that deliver enhanced insight

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Harness the diverse skills required to deliver integrated thinking across customer, culture, people, process, data and technology


PROTECTIVE Reporting that prevents conduct breaches

Rogue Trading Price Fixing Misselling Financial Crime

Customer Voice Structured

1st Party Data (Audio, Video, Email, Instant Messaging)

Externally Hosted Structured

2nd Party Data (Live Feeds)

Multiple Structured & Unstructured

2nd & 3rd Party Data (Global Big Data)

Structured Advanced Analytics Layer (prescriptive, descriptive and predictive analytics)

Conduct Risk Data Flow – ‘The Art of the Possible’ 3

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PRE-EMPTIVE

Reporting to the Regulator (Culture)

Bank Operations Structured

1st Party Data (Transactional, Customer, Reference)

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Finance

Customer driven What the customer wants, how they want it Retain / build out customer base

Customer sentiment driven Provide supporting evidence to Regulator of a positive culture and Treating Customers Fairly ✓

Protecting Reputation

• Bribery /

Corruption • Negligence • Customer

Exploitation

PERFORMANCE

Reporting that drives better business

Risk Mgt.

Treasury

CRM Trading Desks

Product Control

HR

Marketing

Purchasing

Customer Insight

Product Insight

Operational Insight

Market Insight

Employee Insight

Financial Insight


Our Key Differentiators – Redefining Commercial Success

Seen As

Client

Unique SMEs

Reduced Cost

Delivery We operate a successful Smart Source delivery solution, proven to be delivering ‘right first time’ for global financial institutions, at a value that completely undermines our competitors.

Our clients genuinely do not want to let us go. We provide confidence and instil trust, through our people, their history, knowledge and repeatability.

Our commercial model is different. We can tie our success (fees) to your success. We are genuinely focused on delivering outcomes for our clients, not outputs.

Why ACS?

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Confidence and Trust

Agile and Client

Focused

Our technology delivery centre is at the forefront of state-of-the-art analytics delivery supporting multiple technologies. Technology

Capability

We are extremely agile and client focused. We focus on doing the right thing at the right time to ensure quality and timely delivery. Every time.

We strive to be seen as the client, and integrate invisibly amongst existing client resources. We don’t behave as an external, we act like you and act in your best interests.

Outcomes Not

Outputs

Our team will impress you. We bring you the strongest experts from all disciplines needed to solve the Conduct Risk issue - Risk, Compliance, Customer Experience, Culture and Technology. We think differently and we do not deploy inexperience onsite.


Our UK Conduct Risk Practice

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Paul Forrest Chairman

Data Solutions Paul has some twenty-five years experience of helping businesses to solve complex business problems, deliver their transformation goals and to achieve tangible strategic outcomes. Paul has worked with many Global 500 businesses and major Government entities around the world including Ford Motor Company, VAG Group, BAE Systems, GSK, AkzoNobel, RBS, HBOS, Diageo, Bacardi, Wal-Mart, BA, Virgin Galactic, BT. He has recently been nominated one of the most influential people in Big Data (Data IQ 2015).

Malcolm Staite Partner Risk &

Compliance Solutions Malcolm has a broad spectrum of experience spanning 30 years in managing enterprise scale governance, risk and compliance (GRC) functions in the Banking and Insurance sectors, financial and business control environments. transformations. Malcolm has advised and delivered at many global banks including Barclays, Lloyds Banking Group, Royal Bank of Scotland, Rabobank and Banco Santander. Malcolm is a Conduct Risk SME and thought leader in the industry.

Peter Massey Specialist Advisor

Customer Experience Peter is a serial entrepreneur with 30 years experience in technology, outsourcing and customer experience. Working with strategic problems and delivering operational practices, he has an extensive track record and reputation across industries with blue chip clients such as Axa, Vodafone, Microsoft, M&S, eBay, HMRC and the Cabinet Office. He is managing director of specialists Budd, implementing Amazon’s growth model; chair of the Chief Customer Officer Forum and is a well known speaker and author on the subject of customers.

Ian Hacon Partner Leadership &

Culture Ian is a charismatic leadership coach, worked closely with a diverse number of board level members at a portfolio of global organisations. He has specialisms in leadership development, wellbeing and resilience, understanding corporate purpose, embedding culture, executive coaching, financial awareness, employee and other stakeholder engagement. His varied background, relaxed style and amenable personality make it easy for him to help others understand the need for, and make commitment to, positive change.

Steve Miles Partner Data /

Technology Solutions Steve has 25 years of experience managing and delivering complex Information Delivery systems and running international Professional Services operations. Steve bridges the gap between the business and technology functions ensuring that expected outcomes are delivered. Steve specialises in Risk Management solutions, MI, Big Data and Systems Integration and has the background to ensure organisations receive the solutions they require to maintain their competitive advantage.


How to Contact Us

London Head Office 60 Cannon Street London EC4N 6NP

+44 (0) 207 078 1906

India Delivery Centre 425, 4th Floor, Tower B-3 Spaze I-Tech Park Sohna Road, Sector 49 Gurgaon, India – 122018 India

www.acsconsulting.com

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@ACSConsultingUK

[email protected]

www.linkedin.com/company/advanced-capability-solution

advanced capability solutions - conduct risk

Leadership & Management