Outsourcing: It’s Not About What But Who

From Bank Director -

Finding the right outsourcing firm is critical for the success of your financial institution.

Exercising Risk Oversight: Five Questions for Boards to Consider

From Wall Street Journal

 “Boards of directors are working hard to define and fulfill their risk governance and risk oversight roles and responsibilities. The changing economic, business, competitive and regulatory landscapes ensure that this work will continually evolve, so staying abreast (or ahead) of developments is the order of the day. Within that context, and given competing responsibilities, boards need to direct their risk oversight efforts toward the most productive areas and assist management in ways that most benefit shareholders and other stakeholders.

Stephen Alogna, director, Deloitte & Touche LLP, discusses ways in which boards of directors can sharpen their focus on risk. Further below, Dan Konigsburg, managing director of the Deloitte Global Center for Corporate Governance, Deloitte Touche Tohmatsu Limited (DTTL), takes a closer look at global practices regarding board-level risk committees.”

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Bank of England publishes 2010 Payment Systems Oversight Report

The Bank of England has published its “Payment Systems Oversight Report 2010”. The Oversight Report forms an important element of the Bank’s oversight work and offers public accountability for this statutory function of the Bank, as well as increasing transparency about the performance of the overseen systems and acting as a tool to encourage further risk reduction.

The Oversight Report sets out how the Bank has implemented the statutory regime for oversight under Part 5 of the Banking Act of 2009 and how the Bank carries out its oversight of recognized UK payment systems. In its oversight work the Bank oversees interbank payment systems that are ‘recognized’ by the Treasury. Such “recognition” orders exist for Bacs, CHAPS, CLS, Faster Payments Service, and the embedded payment arrangements within CREST, ICE Clear Europe Ltd and LCH.Clearnet.

To summarise the main UK payment systems have continued to demonstrate high levels of operational availability and developments since the previous Oversight Report have contributed to further reductions in risk. The Oversight Report notes some areas where, in the Bank’s view, further measures to reduce potential systemic risks should be undertaken. These include:

• Tiering - the accession of two new members of CHAPS in 2010 and one new settlement member of CREST in 2009 has helped reduce tiering in these payment systems, but tiering remains a risk in UK payment arrangements and should be reduced.
• Payment arrangements for central counterparties (CCPs) - the two recognized CCPs should consider ways to reduce commercial bank risk in their payment arrangements.
• Default arrangements - Bacs should develop proposals to ensure that settlement can complete in all circumstances in the event of a member default.
• Contingency arrangements - payment systems should ensure they conduct a challenging program of business continuity tests to prove their contingency arrangements.
• Governance - payment systems should ensure that their governance arrangements reflect corporate governance good practice, and provide appropriate strategic guidance and challenge to management.