“Ever stricter regulation is an opportunity”
Rudi Sneyers and Dave Vreugde talk about the Risk Management & Compliance Practice at TriFinance Financial Institutions
“In a constantly changing financial sector, it is imperative that Risk Management and Internal Control functions are organised efficiently and effectively. Our practice assists the industry in this major transformation, especially in the modernization of its processes”, says Rudi Sneyers, Leader of the Risk Management & Compliance Practice at TriFinance Financial Institutions.
“We assist our clients to answer to the high expectations of multiple stakeholders and the increasingly demanding regulatory framework.”
The permanently evolving business and regulatory environments have resulted in an increasing attention for risk management, compliance and internal control within banks and insurance companies. “At TriFinance Financial Institutions, we consider ever stricter regulation as an opportunity”, agrees Dave Vreugde, Deputy Practice leader. “We observe a growing number of assignments in these areas.”
The main risks for Financial Institutions
There are some risks types that will require more attention from the Risk Management function in comparison with the past.
- Model risk has become a major concern from the European supervisors in line with the best practices of the Federal Reserve. The definition of an internal model is much broader than the traditional regulatory models in accordance with the sound practices implemented by the Federal Reserve.
- Outsourcing risk and ICT risks (including outsourcing to cloud service providers) will increasingly be in the spotlight for all Financial Institutions. Banks have been requested to comply with new regulation in this perspective
- The low interest rate environment, business model concerns and non-bank competition might provide an incentive for both insurers and banks to search for yield by decreasing underwriting standards.
Focus points of the Risk Management & Compliance Practice
The TriFinance Risk Management & Compliance practice supports banks and insurers in addressing the tighter regulatory standards relating to risk management, compliance and internal control. We also help financial institutions in all kinds of transformation processes of the Risk Management and Compliance function to be better prepared for the rapidly evolving external environment.
Some of our focus points:
- adjusting governance and processes to streamline multiple data requests of supervisors and governance bodies
- efficiently implementing proportionality for smaller insurance companies. EIOPA seems to be show some willingness to move into this direction.
- the progressive transition from predominantly risk-related operational processes (such as credit administration) to more risk analytics.
- achieving a better balance between sound risk governance, regulatory compliance and forward-looking risk management
Support of the internal control functions
Our pragmatic and proportionate approach will allow financial institutions to evolve towards greater agility and proactivity in risk management and the organization of their internal control.
The Internal Control functions will come more in the spotlight in terms of:
- Early detection of ‘unethical’ financial transactions (Anti Money Laundering – Fraud – Financing of Terrorism). As we saw in recent months, several European and Belgian financial institutions are under fire for lax AML approach, which could reveal a systemic problem in the industry.
- Customer protection when marketing financial products under the MIFID legislations (by promoting more detailed customer information and transparent sales and marketing practices while putting limitations on cross-selling practices)
- Upstream involvement: compliance considerations should be addressed at a very early stage in the design and launch of new products while Governance bodies receiving appropriate reporting on all relevant compliance issues.
- Enhancing the internal control framework in the different phases of outsourcing projects.
- Customer expectations are rapidly evolving with the arrival of FinTech and InsurTech. Banks and Insurance undertakings will be forced to re-design processes both in the lending and the investment side. The second line of control function should reconsider internal control processes to remain pro-active, efficient and effective.
Regulation as an enabler for change
At TriFinance, we focus on the transposition of the new regulation rather than on the impact analysis. Although non-financial risks should be increasingly in the spotlight of financial institutions, we observe that - wrongly - operational risk management is still the less developed part of the risk appetite framework in banks and insurance companies.
Internal control and effective operational risk management will be increasingly monitored by the supervisors and might subsequently be one of the enablers for change.
After holding a wide range of management functions within BACOB Bank and Artesia Banking Corporation, Rudi Sneyers joined the market risk management division of Dexia Bank Belgium (currently Belfius) in 2002 as deputy Head of the division. In 2004, he became Director of the Credit Risk Management division. He was appointed deputy Chief Risk Officer of Dexia Group in May 2007 – a challenging journey in view of the emerging banking and sovereign crisis of 2008 and 2011. From May 2014 until mid -January 2018, he held the position of General Auditor of Dexia Group also in charge of internal model validation and the ECB Office. Rudi joined TriFinance in 2018 to lead FI’s Risk Management & Compliance Practice.
Dave Vreugde joined TriFinance Financial Institutions as a Project Manager in 2016. Before that, he performed external financial audits, for EY, at different financial institutions. During this period, he discovered his passion for Risk management and compliance whiten this sector. His first assignment at TriFinance was as an internal auditor assignment at Bank J. Van Breda & C°.
Dave has experience in the analysis and implementation of regulatory changes such as MiFID II, Basel III and GDPR. Furthermore, he has a broad experience in banking and insurance products, processes, systems, accounting and distribution channels. Dave is experienced in the internal audit of different processes in Finance, Risk, Operations and Regulatory. He has a strong affinity with regulatory implementations.
About TriFinance’s Risk Management & Compliance Practice
The TriFinance Risk Management & Compliance practice is supporting banks and insurance undertakings in anticipating and addressing the tighter regulatory standards relating to risk management, compliance and internal control by monitoring the different European and local regulatory and supervisory bodies. Simultaneously, TriFinance can help financial institutions in all kinds of transformation processes of the Risk Management and Compliance function to be better prepared for the rapidly evolving external environment.