06 Oct 2023
How to improve the 1st line risk and control function
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The most significant development for most participants would be the development of what one leader called, “an environment where we start to run non-financial risk in the same way we run market and credit risk. So, the 1st line would identify the risk, build the controls, and build monitoring models around those controls. Then the 2nd line would put limits around the risk factors in those models. And the 3rd line would take the output of all of that and stress it for CCAR [Comprehensive Capital Analysis and Review] purposes.