Rethinking Risk Management in Financial Services Practices from other domains potx

COMMITTED TO IMPROVING THE STATE OF THE WORLD Rethinking Risk Management in Financial Services Practices from other domains Prepared in collaboration with The Boston Consulting Group World Economic Forum April 2010 The views expressed in this publication not necessarily reflect those of the World Economic Forum USA World Economic Forum USA East 54th Street, 17th Floor New York, NY 10022 USA Tel.: +1 212 703 2300 Fax: +1 212 703 2339 E-mail: contact@weforum.org www.weforum.org REF: 110310 @ 2010 World Economic Forum All rights reserved No part of this publication may be reproducted or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system All photographs are from www.shutterstock.com, except otherwise noted Rethinking Risk Management in Financial Services Practices from other domains Prepared in collaboration with The Boston Consulting Group World Economic Forum April 2010 Contents Preface Letter from the Steering Committee Executive Summary Chapter – 1.1 1.2 1.3 1.4 System-Wide Perspective Introduction Drive diversity Simulate system disasters Manage “fire” 11 11 11 15 18 Chapter – 2.1 2.2 2.3 2.4 Transparency and Information Flow Introduction Aggregate system-wide data Scrutinize complexity Innovate transparently 23 23 24 28 33 Chapter – 3.1 3.2 3.3 3.4 Governance and Culture Introduction Look for trouble Value experience Empower the front line 39 39 40 44 47 Chapter – Conclusion 51 References 52 Appendices Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix 1: 2: 3: 4: 5: 6: 7: 8: Project Background and Approach Summary of Risk Management Lessons Summary of Risk Management Lessons Summary of Risk Management Lessons Summary of Risk Management Lessons Summary of Risk Management Lessons Summary of Risk Management Lessons Summary of Risk Management Lessons from from from from from from from Aviation Fisheries Management IDC Immunology Pharmaceuticals Telecommunications Wildfire Fighting Acknowledgements Project Team 54 54 56 56 57 57 58 58 59 60 62 Rethinking Risk Management in Financial Services Report | | Rethinking Risk Management in Financial Services Report Preface The World Economic Forum is proud to release this report on the topic of Rethinking Risk Management in Financial Services, which was part of the organizing theme for the Forum’s 40th Annual Meeting in 2010: “Improve the State of the World: Rethink, Redesign and Rebuild.” This report is part of an Industry Partnership project endorsed by the Financial Services Governors’ community at the Forum’s Annual Meeting in 2009 The recent financial crisis acquired unparalleled proportions and inflicted long-term damage on economies, countries and people As the true impact of the crisis becomes evident and the financial system stabilizes, it is critical not to “let a good crisis go to waste.” Internalizing the lessons learnt and making the necessary improvements now will make the global financial system more resilient and better able to handle the next meltdown, when it happens The crisis has highlighted the need to improve risk management strategies at both the system-wide and institutional levels in the financial services industry It has demonstrated that efforts limited to specific institutions or jurisdictions are insufficient to address a problem that is global in scope New thinking is required to rebuild a damaged financial system While other efforts have largely focused on improving risk management in financial services “from the inside out,” this report looks at it “from the outside in” – trying to learn from practices and patterns in domains such as aviation, fisheries, wildfire fighting, immunology/epidemiology, telecommunication and pharmaceuticals While not all of these practices are directly transferable to finance, many are and most of them provide much needed fresh perspective and thinking Over the past nine months the World Economic Forum, in collaboration with The Boston Consulting Group, analyzed the outside domains and engaged multiple stakeholders Input from over 100 subject experts, risk managers, academics and business leaders was sought in trying to answer the question: What can the financial services industry to better monitor, manage and maintain the resilience of the financial system? We trust that the report will stimulate your thinking, introduce new ideas and add to the broader discussion aimed at improving the long-term stability of the global financial system On behalf of the World Economic Forum, we wish to particularly thank the members of the Steering Committee, the Working Group, the interview and workshop participants, Project Manager Isabella Reuttner and our partners at The Boston Consulting Group (notably Duncan Martin, Kenny Pun and Rachel Hirsch) for their boundless support Kevin Steinberg Chief Operating Officer World Economic Forum USA Gian Carlo Bruno Director and Head of Financial Services Industry World Economic Forum USA Rethinking Risk Management in Financial Services Report | DISCLAIMER The members of the Steering Committee and the Working Group support the recommendations and views expressed in the report However, they not all necessarily agree on every detailed point made herein The opinions expressed are of a personal nature and not necessarily reflect the stance of the companies represented by the Steering Committee and Working Group members | Rethinking Risk Management in Financial Services Report Steering Committee Co-Chairs Lázaro Campos Chief Executive Officer SWIFT Axel Lehmann Chief Risk Officer Zurich Financial Services Cüneyt Sezgin Member of the Board of Directors Garanti Bank Raj Singh Chief Risk Officer Swiss Re Paul Smith Treasurer State Farm Insurance Members Iain Abrahams Head of Liquidity, Risk and Capital Markets Barclays Capital Karl Guha Chief Risk Officer UniCredit Group Simon Levin Moffett Professor of Biology Princeton University Erwann Michel-Kerjan Managing Director Wharton Risk Management and Decision Processes Center The Wharton School, University of Pennsylvania Jim Webber Chief Risk Officer Aviva Tom Wilson Chief Risk Officer Allianz SE Vanessa Wittman Chief Finance Officer Marsh & McLennan Companies Inc Mark Yallop Chief Operating Officer ICAP Plc From the World Economic Forum: David Rhodes Senior Partner and Managing Director The Boston Consulting Group Luke Savage Director Finance, Risk Management and Operations Lloyd’s of London Gian Carlo Bruno Director and Head of Financial Services Industry World Economic Forum USA Kevin Steinberg Chief Operating Officer World Economic Forum USA Rethinking Risk Management in Financial Services Report | Letter from the Steering Committee The financial crisis has, to put it mildly, seriously challenged our traditional approach to risk management Consequently, a number of individuals and institutions have advanced ideas for improving not only the analytical framework, but also the status and relevance of risk management This report, not only reacts to the most recent episode (although we indeed reference many relevant examples), it also attempts to address a deeper problem: the demonstrated inability of the global financial system to constructively mitigate and deal with financial crises Over the past 40 years, the IMF has counted 88 banking crises Hence, a fundamental question presents itself: Can the financial services industry benefit from experiences in other domains that, over time, have developed sound practices and successful patterns to deal with risk? We believe the answer to be an emphatic “yes” This report explores both what these practices and patterns are, and how they can be applied to the financial services industry Obviously, there are efforts already in progress to improve risk management in the financial services industry initiated by such bodies as the Financial Stability Board and the G20 Many of these efforts are highly relevant, such as the re-alignment of individual compensation with institutional and systemic goals To avoid replication, our report will not dwell further on initiatives already underway In contrast to other and perhaps more conventional studies, our report tries to shed new light by focussing on the lessons that the financial services industry can learn from other environments We take an “outside-in” perspective, thereby differentiating this report from others that focus on improving risk management using traditional concepts, tools, and ideas that always have been and will continue to be inherent and very relevant to the financial sector It is important to recognize that risk-taking is an integral part of many financial institutions’ business models This is a crucial difference to some domains that we have examined Also, we are well aware that outside domains may not provide ready guidance to all aspects of financial services (see Appendix) This report concentrates on stylized patterns and lessons that are potentially transferable to the financial sector while acknowledging that no domain is perfect at managing risk or indeed fully comparable to financial services We further acknowledge that some of our commentary on the industry is by default overly generalized for reasons of brevity We realize that no two financial institutions are identical: relative performances during the crisis have borne that out We ask readers to keep these caveats in mind if, at times, what we depict or suggest does not resonate with what they know from their own institution’s vantage point | Rethinking Risk Management in Financial Services Report 50 | Rethinking Risk Management in Financial Services Report Chapter – Conclusion Through examining domains outside of finance, nine potentially transferable risk management lessons were identified for the financial services community to consider They fall under three focus areas: (1) system-wide perspective, (2) transparency and information flow, and (3) governance and culture Consistent with the point on the importance of internalizing past lessons, financial services policymakers, regulators, and practitioners could engage in further dialogue to discuss how best to incorporate these findings into future policy, regulation, and practice The overall aim is to increase the resilience of the global financial system While the financial system appears to be stable for the immediate future, the financial industry should pause and reflect on past risk-management practices and actively explore potential changes that could be made going forward The following questions are critical: • How can the industry make the proper trade-off between information protection and disclosure as it seeks to enable system-wide risk monitoring and management? • How can the “rejuvenation” and safety of the financial system be balanced without either creating moral hazard or system fragility? • Is the industry on the right track with the current regulatory approach? How can the benefits and vulnerabilities associated with regulatory convergence be balanced? • How can the industry adapt (structurally and culturally) to new threats and innovations of the future, given that it does not yet know the products, the markets, the players, and the consumers of the future? • Given that the next crisis is very unlikely to be prevented by a central controller, how can the industry resist the temptation to “solve” stability issues by over-centralisation and instead strengthen the resilience of individual systemic nodes? The implementation of any needed changes will neither be easy nor can it happen overnight Some require a phased approach; others require voluntary initiatives from the private sector; yet others require regulatory mandates Above all else, international and cross-industry cooperation and trust are crucial to achieving system-wide resilience, and it is in this spirit that this report has been researched and written The project team thanks those who have contributed to this effort, and looks forward to the ongoing debate Rethinking Risk Management in Financial Services Report | 51 References • 2009-2013 FAA Flight Plan January, 2009 Washington DC: FAA • Abraham, T Twenty-First Century Plague: The Story of SARS Hong Kong: Hong Kong University Press, 2004, 2005 • Air Transportation Oversight System Report April, 2002 Washington DC: FAA • “Antibiotic Resistance: An Ecological Perspective on an Old Problem” American Society for Microbiology, 2009 • “ASRS Program Briefing”, NASA, http://asrs.arc.nasa.gov/overview/summary.html, 2009 • “Blueprint for Renewal II: Modernizing Canada’s Regulatory System for Health Products and Food” Health Canada, 2007 • Brilliant, L “Larry Brilliant wants to stop pandemics” TED, http://www.ted.com/talks/larry_brilliant_wants_to_stop_pandemics.html, 2006 • Burns, W “Openness is key in fight against disease outbreaks” Bulletin of the World Health Organization, http://www.who.int/bulletin/volumes/84/10/06-011006/en/index.html, 2006, 84:765-840 • Children, J “Social Science in the Pacific Fishery Management Council Process”, Pacific Fishery Management Council, 2005 • Clute, K “Public Perceptions and Attitudes Towards Wildland Fire” National Interagency Fire Center, http://www.nifc.gov/preved/comm_guide/wildfire/fire_15.html, 2009 • Croft, J “Future Proofing: Can risk analysis prevent more catastrophes?” Flight Global, http://www.flightglobal.com/articles/2007/01/09/211385/future-proofing-can-risk-analysis-prevent-morecatastrophes.html, 2007 • Cyr, N “Ecosystem Approaches to Fisheries Management: Why the Interest and Aren’t We Doing This Already? New Council Member Training” NOAA / NMFS Offices of Science and Technology, 2008 • Finney, M “A Prototype Simulation System for Large Fire Planning in FPA” USDA Forest Service, http://www.fpa.nifc.gov/Library/Docs/Science/FPA_SimulationPrototype_0705.pdf, July 2007 • “Global Public Health Intelligence Network (GPHIN)” Public Health Agency of Canada, http://www.phac-aspc.gc.ca/media/nr-rp/2004/2004_gphin-rmispbk-eng.php, 2004 • “Green Paper – Reform of the Common Fisheries Policy” Commission of the European Communities, 2009 • “Guidance for Industry, Development and Use of Risk Minimization Action Plans” U.S Department of Health and Human Services, Food and Drug Administration, March 2005 • “Guidance for Industry, Good Pharmacovigilance Practices and Pharmacoepidemiologic Assessment” U.S Department of Health and Human Services, Food and Drug Administration, March 2005 • “Guidance for Industry, Premarketing Risk Assessment”, U.S Department of Health and Human Services, Food and Drug 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Services Report • Managing Risks in Civil Aviation: A Review of the FAA’s Approach to Safety September 2008 Washington DC: Independent Review Team • “Managing the Risks from Medical Product Use, Creating a Risk Management Framework, Report to the FDA Commissioner from the Task Force on Risk Management” U.S Department of Health and Human Services, Food and Drug Administration, May 1999 • Martin, D Managing Risk in Extreme Environments London: Kogan Page, 2008 • “Medicine Safety Education” Pfizer, http://www.pfizer.com/health/medicine_safety/medicine_safety_education.jsp, 2009 • Meister, A “The New Zealand Experience with Fishery Management: Lessons Learned: Economy and Environment Program for Southeast Asia” http://www.idrc.ca/eepsea/ev-8324-201-1-DO_TOPIC.html, 2002 • Michaels, D Maxon, T “Some question FAA’s oversight strategy in light of Southwest incident” The Dallas Morning News, http://www.dallasnews.com/sharedcontent/dws/bus/stories/031608dnbusFAAfolo.3a08159.html, 2008 • Morgan, P., Hardy, C., Swetnam, T., et al Mapping fire regimes across time and space: Understanding coarse and fine-scale fire patterns, International Journal of Wildland Fire, 2001, 10:329-342 • Murawski S “Ten myths concerning ecosystem approaches to marine resource management”, Marine Policy, NOAA / NMFS, 2007 • “National Multi-Agency Coordinating Group: Preparedness Strategy 2009” National Interagency Fire Center, http://www.nifc.gov/nicc/administrative/nmac/strategy/Preparedness_Strategy_Introduction.pdf, June 2009 • “Navigating the Council Process – A Guide to the Pacific Fishery Management Council, Second Edition” Pacific Fishery Management Council, 2007 • “Pandemic Influenza Preparedness and Response, A WHO Guidance” World Health Organization, www.who.int/csr/diseases/influenza, 2009 • Rauscher, K Protecting Communications Infrastructure Bell Labs Technical Journal, 2004, 9(2): 1–4 • Roos, R “WHO may redefine pandemic alert phases” Center for Infectious Disease Research & Policy, http://id_center.apic.org/cidrap/content/influenza/swineflu/news/may2609phases-jw.html, 2009 • Sabatini, N “Downward Pressure on the Accident Rate.” FAA, http://www.faa.gov/news/speeches/news_story.cfm?newsId=7170, 2006 • Sompayrac, L How the Immune System Works, 2nd Edition Malden: Blackwell Publishing, 2003 • “Southern California Fires 2007: What we learned, how we worked”, Wildland Fire Lessons Learned Center, 2007 • Stimpson, E McCabe, W “Managing Risks in Civil Aviation” AeroSafety World November, 2008:11-14 http://www.airlines.org/NR/rdonlyres/755F5E03-F457-41BC-A453-ED38F7F375B7/0/ManagingRisksinCivilAviation.pdf • Testimony of Michael Sissenwine, Chief Science Advisor, NOAA / NMFS on Data Programs for Fisheries Management Purposes before the Sub-committee on Fisheries Conservation, Wildlife and Oceans Committee on Resources, US House of Representatives, 2004 • The de Larosière Group “The High-Level Group on Financial Supervision in the EU Report” http://ec.europa.eu/commission_barroso/president/pdf/statement_20090225_en.pdf, February 2009 • “The Final Eight Minutes” PBS, http://www.pbs.org/wgbh/nova/planecrash/minutes.html, 2006 • “The State of World Fisheries and Aquaculture, 2008”, Food and Agriculture Organization of the United Nations, 2009 • “The Sunken Billions – The Economic Justification of Fisheries Reform”, The World Bank, 2009 • Thomson, I “FBI warns of VoIP spoofing threat” Secure Computing Magazine, http://www.securecomputing.net.au/News/130880,fbi-warns-of-voip-spoofing-threat.aspx, 2008 • “United States Pharmaceutical Product Liability: Current Trends and Risk Management”, BioInsights, Biotechnology & Life Sciences Practice Group, August 2006 • World Health Organization, http://www.who.int, 2009 Rethinking Risk Management in Financial Services Report | 53 Appendices Appendix 1: Project Background and Approach The project was launched in the aftermath of the recent credit crises as an industry partnership initiative mandated by the Forum’s Financial Services community at the World Economic Forum’s Annual Meeting in Davos in January 2009 Recognizing that many non-financial-services disciplines have a high potential for risk management lessons that are applicable to the financial system, the working group began by selecting nine domains for further research based on their track records in managing risks within complex systems These domains were fisheries management, wildfire fighting, pharmaceuticals, aviation, telecommunications, immunology, infectious disease control (IDC), chemicals, and logistics However, the working group then decided to concentrate on the first seven and filter out chemicals and logistics Although there are certainly lessons to be learned from the latter two domains (including for example, the use of safety valves, built-in redundancy, and rigorous contingency planning) the working group felt that such lessons were not necessarily unique and could be captured elsewhere In order to capture the best ideas from the other domains, the working group undertook an independent, multidisciplinary effort Academics, industry practitioners, and regulators from each domain were engaged through workshops and interviews Some of the ideas of selected experts are included as sidebars in this report The risk management lessons gathered from many expert interviews and secondary research in each domain are summarised and included in the appendix Some of these lessons are further synthesized in the body of the report, while some remain solely in the appendix, as there was limited direct transferability to financial services As a framework for examining how lessons from other domains can apply to financial services, the working group chose to focus on three areas 34: (1) system-wide perspective, (2) transparency and information flow, and (3) governance and culture (1) System-wide Perspective: “System-wide perspective” looks at the compilation of interconnected local-level risks with a holistic lens This contrasts with “local-level perspective,” which examines localized risk management practices in terms of transactions and specific entities (2) Transparency and Information Flow: “Transparency and Information Flow” refers to the mechanisms through which information is exchanged within an organization and across a larger system It addresses how risk signals are detected, reported, and escalated It concerns how decision makers receive the best available information in a timely manner (3) Governance and Culture: “Governance” refers to the rules and oversight of all activities related to risk ownership and responsibility It includes the following five topics: why decisions are made, how they are made, how they are escalated, who makes the decisions, and the processes for monitoring these decisions Governance is underpinned by an organization’s risk “culture” – the set of shared attitudes, values, goals, and practices that characterizes an institution, organization, or group A risk-sensitive culture is one in which individuals are willing to voice risk-based concerns without potential negative consequences 34 Originally, when analyzing risk management lessons in the seven domains, the working group also looked at “Decision Tools and Processes” as a fourth focus area However, the translation of these learnings to Financial Services was not deemed as relevant or innovative and was therefore not featured in this report (although the related domain lessons remain in the Appendix) 54 | Rethinking Risk Management in Financial Services Report Finally, it is important to note that the explored domains are very different in nature Major differentiators include: • Evolved versus designed, and social versus engineered systems • Tolerance to risk (accepting risk is core to the financial-services business paradigm) • Clear definition of the “enemy” in certain domains (e.g pathogens can cause disease, whereas in financialservices products, depending on their nature, can turn from good to bad) • The distinction between risk and safety in some domains The outside domains examined may not be entirely relevant to all aspects of the financial services realm This report focuses on potentially transferable lessons while acknowledging that no domain is perfect at managing risk or indeed fully comparable to financial services When thinking about transferring lessons, readers should consider the following framework, where the shaded quadrants denote the primary focus of the report Effect Large, non-systemic event Systemic damage or meltdown Exogenous shock to system [1] [4] Endogenous unstable state of system [2] [3] Cause By reference to the recent crisis (which was systemic), the report when focused at the financial system addresses quadrants [3] and [4] with priority over the other quadrants – though some of the other domains have different priorities in their handling of risk Aviation is a good case, where the possibilities for systemic damage are less numerous than those for large non-systemic events, such as plane crashes However, by way of example, a design flaw in an altimeter initially resides in quadrant [2], but can easily migrate into [4] should it remain undetected and affect large numbers of commercial aircraft that are simultaneously vulnerable due to specific circumstances (e.g., weather) Quadrants [1]/[2] and their associated analogies from other domains will still be relevant to readers who are in charge of large institutions, and therefore ‘domain stories’ are emphasised in order to spur creative thinking and for readers to draw some of their own conclusions beyond what is outlined directly in the report Rethinking Risk Management in Financial Services Report | 55 Appendix 2: Summary of Risk Management Lessons from Aviation Appendix 3: Summary of Risk Management Lessons from Fisheries Management 56 | Rethinking Risk Management in Financial Services Report Appendix 4: Summary of Risk Management Lessons from IDC Appendix 5: Summary of Risk Management Lessons from Immunology Rethinking Risk Management in Financial Services Report | 57 Appendix 6: Summary of Risk Management Lessons from Pharmaceuticals Appendix 7: Summary of Risk Management Lessons from Telecommunications 58 | Rethinking Risk Management in Financial Services Report Appendix 8: Summary of Risk Management Lessons from Wildfire Fighting Rethinking Risk Management in Financial Services Report | 59 Acknowledgements This publication is a synthesis of ideas of many individuals from financial services and other domains The Rethinking Risk Management in Financial Services project team would like to thank everyone involved for contributing so generously their time, energy and insights The project team would also like to offer its special gratitude to the members of the Steering Committee for their guidance, and to the Senior Project Advisors and the members of the Working Group for their contributions through workshops, idea generations, and document reviews Their devotion is critical to the shaping of this report Steering Committee • • • • • • • • • • • • • • • • • Iain Abrahams, Head of Liquidity, Risk and Capital Markets, Barclays Capital Lázaro Campos, Chief Executive Officer, SWIFT Karl Guha, Chief Risk Officer, UniCredit Group Axel Lehmann, Chief Risk Officer, Zurich Financial Services Simon Levin, Moffett Professor of Biology, Princeton University Erwann Michel-Kerjan, Managing Director, Wharton Risk Management and Decision Processes Center, The Wharton School, University of Pennsylvania David Rhodes, Senior Partner and Managing Director, The Boston Consulting Group Luke Savage, Director, Finance, Risk Management and Operations, Lloyd’s of London Cüneyt Sezgin, Member of the Board of Directors, Garanti Bank Raj Singh, Chief Risk Officer, Swiss Re Paul Smith, Treasurer, State Farm Insurance Jim Webber, Chief Risk Officer, Aviva Tom Wilson, Chief Risk Officer, Allianz Vanessa Wittman, Chief Finance Officer, Marsh & McLennan Companies Inc Mark Yallop, Chief Operating Officer, ICAP Plc Gian Carlo Bruno, Director and Head of Financial Services Industry, World Economic Forum USA Kevin Steinberg, Chief Operating Officer, World Economic Forum USA Senior Project Advisors • • • • Michael Drexler, Managing Director, Head of Strategy & Planning, Barclays Capital and Barclays Wealth Duncan Martin, Partner and Managing Director, The Boston Consulting Group Philippe Morel, Senior Partner and Managing Director, The Boston Consulting Group David Rhodes, Senior Partner and Managing Director, The Boston Consulting Group 60 | Rethinking Risk Management in Financial Services Report Working Group • • • • • • • • • • • • Philippe Carrel, Thomson Reuters Hervé Geny, ICAP Plc Anwarul Hasan, Swiss Re Daniel Hofmann, Zurich Financial Services Ltd Henry Johnson, Lloyd’s of London Ajay Junnarkar, Marsh & McLennan Companies Inc Gottfried Leibbrandt, SWIFT Nancy Leveson, Massachusetts Institute of Technology Ebru Ogan, Garanti Bank David M Rowe, SunGard Data Systems Inc Leo M Tilman, L.M.Tilman & Co., Inc Javier Torres, Grupo Santander Other contributors In addition, the project team would like to thank all workshop and interview participants for contributing their insights and time These individuals were (in alphabetical order): • Sebastian Bonhoeffer, Institute of Integrative Biology, ETH Zurich • Nicolas Boutin, The Boston Consulting Group • John S Carroll, MIT - Sloan School of Management • Andrew Cassels, World Health Organization • Marc Castelnou, Direcció General d’Emergències i Seguretat Civil, Departament Interior, Catalonia, Spain • Mike Deimler, The Boston Consulting Group • Patrick Driscoll, United States Military Academy • Frank Edelblut, Control Solutions International • Asaf Eliakim, The Boston Consulting Group • Laurie Garrett, Global Health, Council on Foreign Relations • Lee Garvin, JetBlue Airways Corporation • John Geanakoplos, Yale University • Margaret Gilligan, U.S Federal Aviation Administration • Robin Gisby, Network Rail • Sian Griffiths, The Chinese University of Hong Kong • Ray Hilborn, University of Washington • Udo Jung, The Boston Consulting Group • Sujit Kapadia, Bank of England • Robert Kella, Qantas • Simon Kennedy, The Boston Consulting Group • Thomas B Kepler, Duke University Medical Center • Jưrg Knizek, Lufthansa • Martin Koehler, The Boston Consulting Group • Gerald Kopp, California Emergency Management Agency • Nick Landauer, Safety Regulation Group, UK Civil Aviation Authority • Natalie Lvova, ICAP Plc • William O McCabe, The McCabe Group, LLC • Allison McGeer, Mount Sinai Hospital • Angela McLean, University of Oxford • David K A Mordecai, Risk Economics Limited, Inc • Michael Osterholm, University of Minnesota • George J Pappas, University of Pennsylvania • Alan S Perelson, Los Alamos National Laboratory • Marc Powell, The Boston Consulting Group • Stephen J Pyne, Arizona State University • Andy Quick, Pfizer Inc • Karl Rauscher, Alcatel-Lucent Inc • Glenn Reed, Pacific Seafood Processors Association • Roland Regoes, Institute of Integrative Biology, ETH Zurich • Harvey Rubin, University of Pennsylvania • Michael J Ryan, World Health Organization • Paul de Sa, Federal Communications Commission • Carlos Schnapp, World Economic Forum • Martin Silverstein, The Boston Consulting Group • Michael Sissenwine, formerly National Marine Fisheries Service, National Oceanic and Atmospheric Administration, US Department of Commerce • Mark Sobolewski, United Parcel Service, Inc • Paul Stang, Johnson & Johnson Pharmaceutical Research and Development, LLC • George Sugihara, University of California, San Diego • Adrian Thomas, Johnson & Johnson Pharmaceutical Research and Development LLC • James Tiller, BT Global Services • Dror Topf, The Boston Consulting Group • Michael Tortorella, Assured Networks LLC • Paul Tranter, The Boston Consulting Group • Raj Varadarajan, The Boston Consulting Group • Tom von Oertzen, The Boston Consulting Group • Michael Walfish, The University of Texas at Austin • Carl Walters, University of British Columbia • Scott T Weidman, National Research Council • Wayne Williams, USFS Smokejumper Base, Missoula • Keith Williams, Praxis High Integrity Systems Ltd • Janet Woodcock, U.S Food and Drug Administration Rethinking Risk Management in Financial Services Report | 61 Project Team Authors (in alphabetical order) Rachel Hirsch, Consultant, The Boston Consulting Group Kenny Pun, Project Leader, The Boston Consulting Group Isabella Reuttner, Project Manager, Financial Services Team, World Economic Forum USA Contributors Abhishek Kapur, Consultant, The Boston Consulting Group Bryan Stone, Formerly Associate Director, World Economic Forum USA Production Editors Philip Crawford, The Boston Consulting Group Nancy Tranchet, World Economic Forum Creative Design Kamal Kimaoui, World Economic Forum From the World Economic Forum Financial Services Teams Yvonne Betlem, Associate Director Trudy Di Pippo, Associate Director Abel Lee, Senior Community Manager Lisa Donegan, Community Manager Tom Watson, Project Manager Nadia Guillot, Senior Coordinator Michal Richardson, Coordinator 62 | Rethinking Risk Management in Financial Services Report The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests (www.weforum.org) ... 2009 Rethinking Risk Management in Financial Services Report | 21 22 | Rethinking Risk Management in Financial Services Report Chapter – Transparency and Information Flow 2.1 Introduction In finance,... system Rethinking Risk Management in Financial Services Report | 37 38 | Rethinking Risk Management in Financial Services Report Chapter – Governance and Culture 3.1 Introduction In many domains, ... Risk Officer Zurich Financial Services Rethinking Risk Management in Financial Services Report | Executive Summary The recent financial crisis exposed many weaknesses in risk management in financial