Risk Based Supervision was the focus of a recent Banking Systems User Group breakfast meeting, hosted by C5 Alliance in Guernsey.
The event was led by Tim Loveridge, Chief Transformation Officer of the Guernsey Financial Services Commission (GFSC) and invited delegates from Guernsey’s banking sector to consider the changing face of regulatory supervision and its implications for business IT systems.
Mr Loveridge explained how risk based supervision and the operating platform PRISM (Probability Risk and Impact SysteM) that supports it mean that the GFSC can allocate resources more efficiently.
“Risk based supervision allows the Commission to assess a regulated company, place it into one of four impact categories and tailor the level of engagement accordingly. Ultimately, this approach leads to more consistent and proportionate supervisory outcomes,” he said.
“It is less about being reactive; risk based supervision is a proactive process, relying on mitigation and early intervention by assessing risk holistically across a businesses. The intention isn’t to be unduly restrictive and we expect businesses to take measured risks and strive for innovation, but they must be aware of how to mitigate those risks.
“By taking operational models into account when conducting risk assessments, the adequacy and associated risks of a firm’s own IT systems now falls under the scope of supervision more than ever,” he said.
Marc Lainé, managing director of C5 Alliance in Guernsey and co-ordinator of the banking systems user group said:
“Tim provided a very useful summary of how the Commission’s activity is changing and it was interesting to see how technology plays a big role in the delivery of this framework, through the PRISM system.
“The key message for IT practitioners and decision-makers in the banking sector is that there is a very clear need for executives in business to lead on IT matters,” he said.
The Guernsey banking systems user group meets several times a year to discuss current issues in the banking sector related to IT and consider how businesses can collaborate to improve Guernsey’s offering in the international finance market.