All too often, people are confused or misunderstand what is Risk Management and what is Compliance. Most companies have both a Risk Management function and a Compliance function. For these functions to be effectively chartered in a company, it is important for executive and senior management of the company to fully understand the roles and responsibilities of each function and how the two functions differ. This then will support the construction of an operating framework for each function that will provide the function with the guidance required to carry out their respective duties as well as to complement each other in certain areas of oversight.

To support the understanding of each function, the first segment of the presentation addresses the roles and responsibilities of each function and how they differ. The second segment of the presentation will then examine nine cases of risk episodes that companies/operating entities actually experienced. Each of these cases will demonstrate the Risk Management and Compliance as well as general management deficiencies that contributed to the risk event experienced. It should be noted that these case studies, in addition, will provide very interesting insight into the importance of risk management in general.

To fully understand Risk Management and Compliance Management in terms of their roles and responsibilities and how the two functions differ in their mandates. To then serve as a blueprint for the construction of operating directives for each function within each business

The Risk Management and Compliance functions are critical to the management oversight of a company’s business activities and functional units.  It is the Risk Management and Compliance functions in each of a company’s business and functional units that drive a company’s overall Risk Management and Compliance oversight practices. There are risk elements and legal and regulatory requirements as well as policies that are unique to each business and functional unit. Therefore the Risk Management and Compliance functions of each business and the functional unit must perform their responsibilities in the context of both the organizations in which they reside and the company in general.

It is key that their Risk Management and Compliance functions are well versed in the undertakings of the business or functional unit in which they reside, their roles and responsibilities, the risks that can exist and the external and internal policies that must be adhered to. The operating practices of each Risk Management and Compliance function must, therefore, be designed to effectively oversee the activities of each business and function unit. It is important that qualified persons are positioned in each function and have the necessary training to carry out their oversight responsibilities. Another important component of the Risk Management and Compliance functions is management reporting, both at the business level and at the corporate level. The purpose of Risk Management and Compliance reporting is to keep management informed that a business or functional unit is operating in a safe and sound manner, to advise management of the presence of any risk conditions that may exist and any corrective actions being undertaking.