Case studies
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The client was pleased with the review and came away with crucial insights in line with the wider developments in market practices, which contributed to strengthening their RMF.
Since then, the client has asked Crowe to help deliver one of the more complex recommendations and to provide ongoing practical advice on risk management development and embedding.
Review of the risk management framework effectiveness
Outcomes and benefits
The engagement commenced with a clear direction to the aspects of the RMF that the client wanted to focus on, allowing Crowe to provide a cost-effective solution.
Crowe’s team provided the client with an information request to understand the approaches adopted through appropriate documentation. Throughout the documentation review process, Crowe engaged the client regularly to clear questions and validate informally early observations. This proactive approach allowed the team to address any gaps in understanding and ask for additional documentation, where appropriate.
The documentation review was supplemented with focused discussions with the risk function and key stakeholders (Chief Operating Officer, Chief Audit Officer, Chair of the Risk Committee) to understand their perspective on how existing risk management worked in practice. This allowed us to put the documentation in context and understand the links between documentation and behaviours.
A draft report was issued to the client for review, setting recommendations ranked by relative materiality to the overall effectiveness of the design work. The formal client report was then finalised with only minor changes.
Crowe’s approach and activities
Crowe was approached by a Chief Risk Officer (CRO) to deliver a review of the business' risk management framework (RMF). The RMF had been developed as part of the implementation of Prudential Regulation Authority (PRA) regulatory requirement. The review sought to ensure that the RMF design reflected good practice in risk management and to explore opportunities for enhancement.
Challenge
The effectiveness report provided useful validation of the progress made in embedding risk management in line with the risk mandate. The CEO was delighted that our work both pointed to the most significant challenges to risk efficiency and provided an ambitious but practical roadmap.
The client is confident that this work will provide significant value to the business due to the cost-efficient and effective approach to risk and compliance, therefore they are using it as the basis for a programme of further work. This work will help the business to be increasingly confident that its risk-taking will support its future success.
Outcomes and benefits
Crowe’s team first undertook a review of the risk function’s effectiveness against its mandate. We critically reviewed documents and approaches, interviewed senior stakeholders, including non-executive directors (NEDs), and identified practical recommendations for enhancement.
The engagement continued with looking into the efficiency of the risk and compliance operating model, to optimise risk interactions between business and oversight functions. We worked with the Chief Risk Officer (CRO) to identify the most material sources of value, and agreed on key areas of focus, including: risk and compliance operating models, senior management responsibilities, capabilities, and ways of working.
We developed potential solutions which were refined during consultations with key stakeholders and consolidated into a final recommended enhancements. A multi-dimensional transition map was also developed to illustrate potential journeys and stages to improve efficiency while safeguarding effectiveness.
Crowe’s approach and activities
A new Chief Executive Officer (CEO) had joined the organisation and wanted to focus on cost-efficiency across the business, while making sure that risk and compliance met regulatory requirements and was optimised to support the delivery of their strategic growth agenda.
Crowe was asked to undertake a review of the effectiveness of the risk function alongside a broader review of the efficiency of the risk and compliance operating model across the organisation.
Challenge
Review of the risk function efficiency and effectiveness
Following the session with the executives and senior managers facilitated by Crowe staff, the client has taken a number of steps to enhance the resilience of its business to rising UK inflation, including specific changes in its investment portfolio aimed at limiting the impact of inflation.
Outcomes and benefits
Crowe provided a detailed analysis of the causes of the current high inflation levels and an analysis of projections of the future inflation trajectory.
As a follow up to the analysis developed, the Crowe team also supported the delivery of a special session with the executive committee and senior management team, aimed at developing a shared view about inflation and the intended business response.
The session covered:
Crowe’s approach and activities
In light of the rising inflation affecting the UK, a provider of specialist financial services in the UK engaged Crowe to support its holistic review of rising inflation in the UK on all aspects of its business. The aim of the project was developing responses across finance, investment, business planning, pricing, sales among others.
Challenge
Inflation risk deep dive
The internal model application was ultimately accepted by the regulator, allowing the firm to make use of their own model to calculate the Solvency Capital Requirement and support business decision-making.
Outcomes and benefits
Crowe independently reviewed both the internal model in question and the application being made to the regulator, and agreed improvements with the organisation that would support a successful application process.
The review concluded that the model itself was technically robust, being used for business decisions, and it satisfied all the relevant requirements of Solvency II. Crowe made a range of recommendations based on regulator feedback, key stakeholder interviews, and a review of the model governance processes. Our recommendations were scored in terms of 'effort' and 'impact'. This allowed the organisation to focus resources on quick win activities within the tight timescales, before the next application.
Crowe’s approach and activities
An overseas regulator had previously rejected three internal model applications from an insurer. Crowe were appointed to support the insurer’s fourth application and ensure success.
Challenge
Internal model application process
Crowe staff engaged proactively with the client’s staff throughout the process to ensure an appropriate knowledge transfer and helped the business to prepare for a range of future plausible scenarios.
the main drivers of inflation in the UK
a high-level review of official forecasts in terms of levels and duration from different sources, e.g. Bank of England and International Monetary Fund
an outline of the potential future inflation scenarios and a high-level consideration of the potential business implications.
The client was very pleased with how Crowe helped to identify and prioritise the practical changes that were needed in the context of a changing business.
In particular, they welcomed the genuine business partnering approach Crowe adopted – which helped the CRO to deliver added value to their organisation, while maintaining ownership and leadership.
Outcomes and benefits
A small Crowe team was engaged to review the client’s draft Risk Mandate against good industry practice, considering its completeness, coverage of risks, and the articulation of the risk function’s scope and remit. The delivery approach involved:
Crowe’s approach and activities
The appointment of a new Chief Risk Officer (CRO) led to Crowe being asked to help review, refine and benchmark the mandate and approach to risk management of a financial services business which is part of a larger non-financial services group. The client had just restructured the various financial services businesses under a common management structure. Subsequently, specialist Crowe resources were engaged to augment the Risk team while capacity and capability was enhanced.
Subsequently, specialist Crowe resources were engaged to augment the Risk team while capacity and capability was enhanced.
Challenge
Development of risk mandate, and risk management framework and components
Over a relatively short time period, Crowe managed to navigate the complex environment of financial services within the context of a group-wide RMF. The client was delighted with the ‘rapid acceleration’ and high-quality redesign outputs. As these had been developed incrementally with their trust, the client moved into the subsequent implementation phases of their programme confidently.
Outcomes and benefits
Crowe leveraged a review conducted at the client by a third-party firm to inform the ‘baseline assessment’ of the existing RMF.
Thereafter, we anchored all of our subsequent project outputs back to the recommendations outlined in that report, in order to set out a clear audit trail and to provide full transparency.
The Crowe team worked closely with the client's team on the redesign and development of a tailored RMF in line with both the minimum regulatory requirements applicable. The Chief Risk Officer and his team was engaged to validate the design and related priorities and to assist with future embedding.
Following the ‘one team’ delivery approach, we then shifted to handing over the design outputs and coaching the client’s team on selected and highest priority components of the RMF. These included the risk mandate, risk universe, risk strategy and policy, risk appetite framework, risk preferences, risk policy framework and template, risk ranking and aggregation, risk reporting template, and risk process documentation template.
Crowe’s approach and activities
A mid-sized financial services business part of a quoted non-financial services group, engaged Crowe to lead a review of its risk management framework (RMF) and an initial redesign phase for a number of its high-priority components.
Challenge
Risk management framework redesign and development
The client was pleased with the review and came away with a comprehensive understanding of how enhancing risk management tools and changing risk accountability can support effective decision-making and of the steps it could take to further refine and embed its approach to add value.
Outcomes and benefits
The assessment report outlined a suite of recommendations, which was reviewed by Crowe and the client to prioritise the enhancements that were most important to the client. Once agreed upon, Crowe undertook the simultaneous delivery of multiple enhancements whilst considering the dependencies between the outputs. This approach allowed Crowe to deliver the maximum amount of value to the client in the allotted timeframe and budget.
The key enhancements included: clarifying the purpose and vision for risk management; developing a more comprehensive risk strategy; enhancing risk reporting; and strengthening specific risk management processes. For each enhancement, Crowe's team engaged with the risk function and (where appropriate) key executives to determine a desired delivery approach and ensure that the proposed solutions were fit for purpose.
Crowe’s approach and activities
The appointment of a new Chief Executive Officer (CEO) and the result of an internal audit review led our client, a highly specialist financial services business, to engage Crowe to undertake a high-level assessment of their risk management framework (RMF). The engagement was designed to identify potential areas of enhancement to their RMF and provide hands-on and practical support on the implementation of those recommendations.
Challenge
Review and enhancement of risk management
reviewing client documentation to understand the business, its strategy and operating model
drafting a risk mandate for Board approval consistent with the SMF responsibilities of the CRO
assessing the maturity of the risk function activities and setting maturity targets
identifying design options for the risk function, considering the advantages of different operating models.
Follow-on work involved specialist Crowe resources working closely with the Risk team to review and develop specific components of their risk management framework, including a risk function development plan, risk strategy and appetite, risk roles and responsibilities, risk governance, scenario analysis, conduct risk management approach, recovery and resolution planning, risk policies and standards, risk and compliance attestation, and risk MI and reporting.
reviewing client documentation to form initial views about the framework
interviewing key internal stakeholders to understand their perspectives on how existing risk management worked in practice.
Crowe conducted an initial high-level review of the client’s RMF, through: