Risk Management
ERM System Selection
Cadre's consultants will assist the Bank in specifying and acquiring risk management information software solutions, including stress testing, key risk indicator tracking, risk assessment and risk control systems. Such systems typically include specific risk assessment templates, such as those required by regulatory authorities for BSA/AML and Vendor Management, as well Risk Dashboards. Others include more advanced features such as risk-based financial planning and forecasting tools, including:
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Interest Rate Risk,
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Liquidity Analysis,
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Stress Tested Contingency Funding Scenarios,
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Loan Quality Projections and Stress Testing, and
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Forward-Looking Risk Based Capital Planning.
Key steps included in this effort include:
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Preparing a critical business needs analysis,
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Developing a request for proposal,
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Identifying vendors and soliciting proposals,
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Evaluating vendor proposals;
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Selecting system and vendor; and
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Negotiating contracts.
To a certain extent, these systems also interface directly with core system solutions and other technology applications.
Cadre can also help the Bank implement the chosen solution. Such assistance is not contemplated in this proposal and would need to be discussed and agreed upon following the selection of the risk management system.
Risk Appetite Statement Development
A risk appetite statement sets the boundaries for strategic decision-making and ultimately day-to-day business decisions and on-going risk management. To develop this statement, Cadre will review the Bank's strategic business plan, work with management to develop financial forecasts using expected, best case and worst case business scenarios and work with management and the Board of Directors to develop the critical assumptions, strategic objectives and risk limits that would define an acceptable risk tolerance for the Bank. Results of this work, including a draft risk appetite statement and forecasts, will be discussed with management and directors and appropriate revisions made to produce a final version of the risk appetite statement.
Risk Management Assessment and Plan
Cadre’s Risk Management Assessment and Plan enables management to effectively evaluate the institution’s current risk environment and the effectiveness of its risk mitigation.
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Evaluate the level of the institution’s inherent risk in each regulatory-defined category
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Assess trends in and exposures to risk in each category
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Evaluate existing methods for identifying, measuring, monitoring, and controlling risk
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Create actionable plans to address identified risks or gaps in the risk management process
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Align risk management reporting systems with risk management guidelines in the institution’s policies and strategic objectives
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Establish a risk management team with defined roles to govern the way the institution manages Enterprise-wide Risk over time
KRI Dashboard Development
Cadre's consultants will work with management to develop a risk monitoring dashboard of key leading and trailing risk indicators that is aligned with the Bank's strategic business objectives, risk appetite statement, risk guidelines incorporated into policy statements and regulatory requirements. The dashboard will include risk indicators in each of the seven key risk categories defined for banks by the FDIC and other regulatory agencies. Indicators in the dashboard will be based on information derived from operational and financial results of the Bank, as well as from relevant external sources.
