Risk Advisory Services for Financial Institutions

Risk Advisory Services for Financial Institutions

Introductio
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Good risk management doesnt slow an organization down it helps it go faster.

Ernst & Young won Hong Kong Most Admired Knowledge Enterprise (MAKE) Award (2010)

Regulatory pressure continues to increase for financial institutions. In this business environment, executive management and board members want a deeper understanding of their key business risks, how these risks are being managed in their businesses and, in particular, how to manage risk to create the greatest return for their shareholders.

The Ernst & Young Financial Services Risk team is built on competency by addressing clients strategic and operational challenges, which are relevant to todays environment. Strengthen your lines of defense and turn risks into opportunities The Ernst & Young Financial Services Risk team assist its clients in all areas of the three-lines of defense model: Internal Audit Internal Controls Governance, Risk & Compliance Regulatory Services Our team of professionals combine: Sector-driven subject matter specialists in banking & capital markets, asset management and insurance Depth of knowledge and experience that comes from working for and with diverse and leading organizations Extensive understanding of local culture, values and languages

Present in all lines of the Three-Lines of Defense Model

Risk Owner Management Board Risk Taker Risk Controller Independent Assurance

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Risk Business Units (independent) Risk Controlling Functions Internal Audit

Ernst & Young is one of the most globally integrated organizations in professional services. Our mindset, actions and structure are unique in our profession. We are globally connected and locally engaged. Our global approach and our ability to provide a consistent and harmonized service everywhere help us to make a difference by helping our clients achieve their potential.

Firms are on a journey to instill awareness and ownership of risk

73%
Say they are still in the process of shifting the culture

23%
4%
No shift Making progress Significantly shifting

If you are going to have a risk culture throughout the company, you need the heads of the lines of business to walk the walk and talk the talk.

Source : 2010 The Institute of International Finance (IIF) Report

Risk Advisory Services for Financial Institutions

Internal audi
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Companies value the role Internal Audit plays. Executives want Internal Audit to not only see what has gone before, but also what comes next. They want Internal Audit to provide insights into strategic initiatives, and to share ideas that improve business performance. And they want it now.

Internal audit

Ernst & Young has provided internal audit services for over 25 years, and our goal is to help clients create leading internal audit functions. We accomplish this goal by sharing innovative and effective industry leading practices and processes with our clients. We have invested USD150 million in creating proven internal audit methodologies and technologies.

Our Ernst & Young internal audit service delivery platform underlies a common language and framework comprised of three independent sets of activities: Assess, Improve, and Monitor (AIM), that we will align to your business needs to address your evolving risk profile. Our services include: Internal audit outsourcing & co-sourcing Internal audit risk assessment Internal audit quality assessment Functional performance assessment Internal audit transformation Training

We went to Ernst & Young because of their clear leadership in internal audit - coupled with the fact that this was an important decision for us. It was a bit like the 80s when you went to IBM for your computer and Xerox for your photocopier. Global Audit Director, UK listed bank

One of my clients is a large European insurance group developing exponentially in Asia. We helped them to tailor their internal audit program, by applying Group-wide standards, to the risks faced locally and delivered efficiently in a co-sourcing arrangement. As a former head of an internal audit department for a large insurer, I know how difficult it can be to execute the audit plan. Adding value to internal audit through practical and pertinent recommendations is paramount. I apply the Ernst & Young methodology and tailor it precisely to my clients business products and systems. Florence Senior Manager Advisory Risk Greater China

Ernst & Young has internal audit relationships with more Fortune 500 companies than any other Big Four Organization.
Source: 2012 Fortune 500 Market Share Ernst & Young Survey.

Risk Advisory Services for Financial Institutions

Internal control
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82% of global institutional investors will pay a premium for companies that demonstrate successful risk management1 61% will not invest where there is evidence of poor risk management2 79% of organizations with mature risk management systems are either moderately or very successful at protecting and enhancing shareholder value3

1&2

Investors on risk, Ernst & Young, 2006 Global Enterprise Risk Management Survey, AON, 2010

Internal controls

By combining our knowledge and experience of risks and controls, we can help your company enhance your process control efficiency and effectiveness.

A greater understanding of risks and controls can result in enhanced delivery of cost-reduction activities. Rating agencies are also increasingly interested in companies risk management.

Our services include: Risks and controls assessment Evaluation of operating effectiveness Internal controls assessment and evaluation relative to strategic, compliance, operational and / or financial risks Formulation of appropriate actions / remediation plans Design of improvements to processes and controls SOX 404 assessment, testing and monitoring Pre-IPO internal controls advisory ISAE 3402/ SSAE 16

What can be a better reference than one that comes from within a clients own organization? We worked with the compliance team of a very large multi-national financial institution helping them review their internal controls over certain processes. They were so impressed with the quality of the work we delivered and with our people who performed above the normal call of duty, that they continue to call us and refer our team to other departments in their company whenever they need assistance not only for area of internal controls but also other business needs where our team and Ernst & Young are able to assist. Aris Manager Advisory Risk Greater China

Ernst & Young ranked 1st in the Operational Risk & Regulation Consultancy Ranking in 2010 & 2011.
Source: The Operational Risk & Regulation consultancy rankings are based on a poll of OR&R readers conducted in December 2011.

Risk Advisory Services for Financial Institutions

Governance, Risk Complianc

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An average company spends 4% of revenue on risk management activities. The Ernst & Young approach to GRC ensures that organizations not only leverage their risk spend and reduce their risk of failure, but that they strike a balance between achieving compliance and contribute to protecting and enhancing business performance.

Governance, Risk & Compliance

96% of Financial Services institutions reported an increased focus on risk appetite but only 25% reported a link to business decisions. This is clearly a challenging area.

Nearly 70% of organizations are highly reliant on their Governance / Risk & Compliance (GRC) activities as a safeguard against failure. However, two-thirds of companies think this spending and dependency is not matched by the value that business leaders think they currently get from their GRC functions. Therefore, there is a clear need for getting greater value from what isspent. We offer a holistic and integrated approach to managing risk that drives improved business performance. We help traditionally siloed or disparate risk practices to be aligned and integrated to achieve greater efficiency and value across the risk value chain. We also help executive management and board members to manage risk to create the greatest return for their shareholders. Our services include: Enterprise risk assessment Risk & control framework assessment Enterprise risk management and governance (ERM) Operational risk advisory services

Our client was required by the regulator to address accuracy and completeness issues in their risk catalogue and related internal controls documentation. We were able to mobilize a bilingual English / Putonghua team of subject matter specialists to provide high quality deliverables to be accepted immediately by the regulator. It was a very enriching experience, I felt I was able to add a lot of value to my client. Eric Senior Manager Advisory Risk Greater China

Ernst & Young ranked 1st in the areas of Corporate Governance, Enterprise-Wide Compliance & Risk Management Strategy & Regulations Strategy.
Source: The Operational Risk & Regulation consultancy rankings are based on a poll of OR&R readers conducted in December 2011.

Risk Advisory Services for Financial Institutions

Regulatory Service
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Regulation and compliance risks are one of the most serious challenges perceived yesterday, today and tomorrow.

Regulatory Services

Our work on regulatory and compliance, include the issues on Anti-money Laundering, FATCA, Solvency II, Basel II & III and Regulatory Licensing.
We assist financial institutions in the development and implementation of practical solutions to regulatory directives and evolving regulatory expectations regarding compliance, risk management, and internal control issues. Our team includes professionals with significant regulatory and industry experience. Anti-money Laundering We assist financial services organizations in identifying money laundering risk, reviewing controls over suspicious activity, assessment of compliance with regulations and leveraging technology. Our approach also helps clients to carefully consider important tradeoffs for additional investments in AML programs and technology solutions. Our services include: AML risk assessment Independent controls testing Building or enhancing existing programs Benchmarking to local regulatory requirement and / or current market practices Evaluating and implementing software tools and techniques Responses to regulatory or supervisory mandates FATCA Technical seminars Impact assessment Implementation support SFC Licensing Hong Kong SFC Licensing Bank licensing Compliance operations and regulatory advice Compliance due diligence / internal control reviews Training

With the many updates in anti-money laundering and counter-terrorist financing regulations, I have been leading many engagements in this field. With my, and my teams wealth of experience, I can, not only help my clients to be compliant, but also provide value-added market insights on the current practices amongst financial organizations. My clients really value this. Vincent Manager Advisory Risk Greater China One of the myths around FATCA is the Asian financial institutions are not impacted by this American tax legislation. We carried out an impact assessment for a life insurer with extended operations in Asia. It was fascinating delving into the operations and identify impacts which were unexpected. Sam Senior Manager Advisory Risk Greater China Regulatory aspects play an important role when establishing asset management structure and also in its on-going operations. More onerous regulations are forcing asset managers to invest more time and money in compliance and related activities. Effectively navigating the increasingly sophisticated regulatory environment will be a key challenge and could be a source of competitive advantage for asset managers over the next several years. Our aim is to deliver regulatory and compliance services helping asset managers to meet the relevant regulatory requirements while being flexible enough to accommodate future regulatory developments. Ying Senior Manager Advisory Risk Greater China

Ernst & Young ranked 1st in the areas of Anti-Money Laundering, Basel II/III, Fraud/Financial Crime Prevention & Treating Customers Fairly.
Source: The Operational Risk & Regulation consultancy rankings are based on a poll of OR&R readers conducted in December 2011.

Risk Advisory Services for Financial Institutions

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Ernst & Young won the Hewitt Best Employer in China (2009), being the only professional services organization named in the Top 10 list. This award is an accomplishment that validates Ernst & Youngs stated goal of being the Employer of Choice in China, by providing a world-class working environment for its people, supported by learning, recruitment and retention policies. Ernst & Young is present in 20 cities in China and employ more than 10,000 people. We also have access to 152,000 professionals around the world. Our risk team is present in Hong Kong, Beijing and Shanghai.

Ernst & Young Assurance | Tax | Transactions | Advisory

About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. 2012 Ernst & Young, China. All Rights Reserved. FEA no. 03001984
This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither the Ernst & Young China practice nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

Contact us
Philip Rodd Partner Greater China Risk Leader +852 2846 9028 philip.rodd@hk.ey.com Florence Carr Senior Manager +852 2629 3191 florence.carr@hk.ey.com Eric Leung Senior Manager +852 2629 3886 eric-hk.leung@hk.ey.com Samuel Tran Senior Manager +852 2846 9721 samuel.tran@hk.ey.com Ying W Wang Senior Manager +86 10 5815 3520 ying-w.wang@cn.ey.com Please visit: www.ey.com/china

www.ey.com/china
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