Key Risks in Private and Merchant Banking PPT

This PPT slide, part of the 92-slide Unlock the Power of Operational Risk Management PowerPoint presentation, outlines significant risks associated with private and merchant banking, focusing on various types of fraud and their implications. Each risk is categorized with specific drivers and impacts, providing a structured analysis for decision-makers.

The first risk highlighted is internal payments fraud and embezzlement, particularly from client accounts. Key drivers include governance issues related to ownership and accountability, process design flaws, and potential criminal intent among personnel. The impacts of this risk are severe, leading to write-downs, additional costs for external consultants, restitution costs, regulatory fines, and legal liabilities.

Next, the slide addresses unauthorized or fraudulent lending by internal staff. Similar to the previous risk, governance and process design are critical drivers. The consequences mirror those of internal fraud, emphasizing the financial and reputational damage that can arise from such misconduct.

The slide also discusses inappropriate or illegal lending due to failures in the credit process, particularly in customer due diligence. This risk is driven by governance, process design, and the expertise of personnel involved. The impacts are consistent with the other risks, highlighting the need for robust oversight and effective processes to mitigate financial losses.

Lastly, external theft and fraud are examined. This risk encompasses external events and criminal intent, with implications that include replacement costs for lost assets, write-downs, and legal repercussions. The emphasis on external threats underscores the importance of comprehensive security measures.

Overall, the slide serves as a critical resource for understanding the multifaceted risks in private and merchant banking, emphasizing the need for effective governance, process design, and personnel management to mitigate potential losses.

This slide is part of the Unlock the Power of Operational Risk Management PowerPoint presentation.

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