financial technology kpmg research report

2021 “pulse of the board of directors” issue IV From kpmg

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The following is the 2021 “pulse of the board of directors” issue IV From kpmg recommended by recordtrend.com. And this article belongs to the classification: kpmg , research report, financial technology.

China’s financial supervision continues to develop in the direction of “stricter and more realistic”. Under the background of strong supervision, consolidated supervision, which aims to deal with the systemic risks caused by excessive financial innovation and the risk transmission of “cross industry, cross-border and cross institution”, and is mainly characterized by “full coverage, strong penetration, risk control and promoting coordination”, has become one of the core tools of macro prudential supervision.

KPMG believes that financial institutions can establish and improve the consolidated management framework and improve the group’s consolidated management ability through the “three steps” of consolidated management.

The first step is to establish an evaluation mechanism for the effectiveness of consolidated management of the group.

Establish an evaluation mechanism for the effectiveness of the group’s consolidated management, paying special attention to the overall planning ability, substantive penetration ability and element management ability of the group’s consolidated management. At the three levels of the leading department of consolidated management, the centralized management department of consolidated elements and the core Tier-1 subsidiary, comprehensively consider the differences in consolidated management capabilities, and formulate targeted improvement plans according to the evaluation results.

The second step is to improve the “eight elements” of consolidated management on the basis of effectiveness evaluation.

The third step is to establish a consolidated management information system.

Financial institutions can build the group consolidated management information system in stages. By building the basic functions of the group consolidated management system, they can realize the online collection of manual reports and the unified collection of management information. On this basis, gradually expand the system functions, take the consolidated management information system as the basic working platform for subsidiary management and the integration platform of all kinds of information, and improve the automation of data acquisition of the consolidated management system.

Focus on climate change and address climate risk challenges

The international community has reached a consensus on the environmental risks faced by commercial banks. China vigorously promotes the green finance strategy, puts forward the corresponding green finance development plan, and improves the ability of climate risk management.

KPMG believes that commercial banks should establish an effective green financial information disclosure and evaluation system as soon as possible, actively respond to the green financial incentive measures implemented in the future, step by step implement the environmental risk stress test management, and grasp the initiative in the process of change, which requires:

First, awareness raising and capacity-building.

By understanding the regulatory requirements of different countries, actively paying attention to the regulatory trend, while exploring and developing models and tools, improve employees’ understanding and understanding of new risks, and cultivate professional management talents and expert teams.

Second, implement the solution.

Timely summarize and share existing experience, and actively participate in scheme design and construction. According to the main classification of climate risk, namely physical risk and transformation risk, this paper puts forward the methods of identifying, quantifying, monitoring and managing risk, and develops climate risk analysis methods suitable for the characteristics of China’s banking industry.

Third, improve the data and system.

Collect data through a variety of methods to comprehensively evaluate the physical and transformation risks faced by customers and their resilience. Build a scientific and effective data management system to manage relevant data and provide data basis for environmental and climate risk stress test.

Third party risk management

Third party risk management aims to assess and manage the risks caused by third-party products and services, involving internal and external third parties. Among them, external third parties include suppliers, service providers, contract institutions and agents, while internal third parties include subsidiaries, parent companies and shared service institutions. In terms of risk categories, the potential risks covered by third-party risk management include compliance risk, strategy risk, concentration risk and so on.

Effective third-party risk management must implement risk identification, supervision and management procedures under the leadership of the governance. Optimizing the implementation path of third-party risk management needs to focus on four supporting elements: governance, procedures, infrastructure and data.

KPMG suggests that the following implementation steps can be taken to optimize third-party risk management:

Step 1: form a vision consensus.

Establish a management vision around the four elements of governance, procedures, infrastructure and data, clarify preventive measures and responsible departments, and build a vision of technology empowerment. Technology empowerment is very important for expanding the scale of third-party risk management and processing a large amount of data.

Step 2: establish the model.

Clarify the way, time and place of introducing business stakeholders in the third-party risk management life cycle. The second line of defense of third-party risk management often involves multiple departments, each department is responsible for the risk under its supervision, while the business department is responsible for the daily management of third-party services.

Step 3: optimize and improve the process.

Classified management of third parties is realized through risk classification. Establish a strict risk scoring method for third-party services, and carry out hierarchical and classified management for third-party services according to the results of risk classification.

Step 4: development and innovation.

The third party risk management team shall use automation, data analysis, natural language processing and scoring services to continuously monitor specific risk areas, performance management and contract compliance at a low cost and with high flexibility, and proactively identify risk events that may be caused by the third party.

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