Risk Management Presentation for Audit Conf AUSPres6-11-09 v5

Will Your Risk Management Program Pass the Casablanca Test?Bank Director MagazineBank Audit Committee ConferenceInsight on OversightJune 11 – 12, 2009Chicago, IllinoisJohn R. ReisnerManaging DirectorAustin Associates, LLCSession Goals• Acknowledging regulatory expectations• Five vital elements of an effective risk management program• Risk assessment model• Stress testing model• Interdependence: risk management and capital preservationThe Handwriting on the Wall – Part One• Market’s Fall Deepens as Concerns Mount on Banks – WSJ 112108• Job Losses are Worst Since ’74 –WSJ 120608• Recession Turns Malls into Ghost Towns –WSJ 052209• Banks Ramp Up Foreclosures –WSJ 041509• Pope Tells World Not To Lose Hope –WSJ 122608Risk Assessment MatrixAny Bank or Thrift - Risk AssessmentAs of May 31, 2009ADEQUACY OF DATE OF LAST RISK INHERENT COMPOSITE TYPE OF RISK RISK TRENDASSESSMENT RISK RISKMANAGEMENTCredit Jan 14, 2009 High Weak High IncreasingMarket Jan 14, 2009 High Marginally Weak High IncreasingMarginally Liquidity Jan 14, 2009 High High IncreasingAcceptableOperational July 16, 2008 Moderate Acceptable Moderate IncreasingLegal April 15, 2009 Moderate Acceptable Moderate IncreasingMarginally Reputational April 15, 2009 High High IncreasingAcceptableFoundational Components of an Effective Risk Management Program• Continuous risk identification• Accurate and timely measurement of risk• Controls to limit and mitigate risk• ...