Smart About Risk
 

Audit of Financial Risk Management

The models (systems) developed for measuring financial risks need to verified on a regular basis both from the point of view of compliance with regulatory methodology, correct set up of the models and the calculations themselves. ARM offers this service in addition to the  capacities of internal (or external) auditors.

Advanced Risk Management verifies whether:
  • the company complies with the methodology imposed by internal and/or regulatory guidelines, i.e. whether employees observe the given methodology or possibly whether the methodology is up to date
  • performed calculations are in compliance with the methodology, i.e. whether results calculated by ARM according to the methodology correspond to results actually calculated by the employees of the company.

 ARM's work culminates in a final report including independent opinion on the methodology and comments and suggestions concerning all facts that are in reality different from the prescribed methodology.

Advantages of cooperation

  • ARM operates as an independent authority. We always deliver an objective assessment of reality
  • In case of discrepancy our recommendations contain specific suggestions how to improve the current situation. They are more than a dry description of reality
  • We understand the problems. Therefore we can write the report where outputs are clear and unambiguous
  • Our success is measured by the success of our clients

 

Company offers consulting services in the following areas:

Audit of the method of measuring and/or managing risk:

credit, market, liquidity, insurance, operational and weather
Based on its long-term experience, ARM is capable of providing an objective assessment of the correct set up of risk management processes. In the case of financial institutions, regular validation of systems or models is an integral part of regulatory requirements. In non-financial companies they should also be a part of regular inspection performed by internal auditors. ARM offers the following services:
  • review/update of risk maps
  • validation of models for measuring identified risks
  • verification of the correctness of risk monitoring (up-to-date process setup, responsibilities)
  • revision of reporting set-up

Audit of existence, consistency, correctness and compliance with internal regulations

Many companies concentrate their efforts on sales activities. That often leads to capacity problems in terms of  keeping  "order" in the company.
Advanced Risk Management offers its services to companies whose resources do not allow regular verification of compliance of internal activities.
  • we will verify the existence of documentation, its currency and compliance with activities performed on its basis
  • we will verify not only formal compliance, but we will also validate models and calculations performed pursuant to documentation
  • the output report is not only a pure statement of facts but contains comments and recommendations that need to be implemented to re-establish compliance with the documentation

Audit of the method of implementation of Basel II, Basel III a Solvency II

Advanced Risk Management has long-term experience with the implementation of regulatory measures into risk management systems in financial institutions. In the area of regulatory implementation of Basel II, Basel III and Solvency II we offer the following services:

Basel II

  • verification of the setup of market, credit and operational risk management according to the relevant legislation of regulatory
  • validation of models for the calculation of capital requirement for credit/operational/market risk both from the point of view of methodological correctness as well as the technical performance of the calculation
  • verification of the correctness of measuring credit, market and operational risk under Pillar II
  • verification of the correctness of internal models under IRB approach a/or AMA approach

Solvency II

  • validation of the calculation of solvency
  • validation of the internal model
  • validation of models for financial risk management
  • validation of the calculation of the premium
  • validation collateral valuation
  • validation of the calculation of technical reserves
  • validation of the valuation of financial assets
  • validation principles of remuneration

Audit of assumptions, construction and usage of internal model

Correctness of each mathematical model needs to be verified after some time from the following point of view:
  • whether the assumptions on which the model was developed are still valid
  • whether it was constructed correctly
  • whether the model is used according to the setup rules