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November 2010

OCBC's Kohnke Shares the Risk Management Paradigm Change Post Crisis

On 11 November, RMI invited Mr. Gilbert Kohnke, the Chief Risk Officer (CRO) of OCBC Bank to speak at the public lecture themed The Role of a Chief Risk Officer: Is there a paradigm change post crisis? More than 110 people, both from industry and academia, attended the talk. The topic of discussion is particularly relevant to today's global economic scenario where risk management has taken a new dimension. The talk was followed by a lively Q&A session. 

Mr. Kohnke started by defining the role and responsibilities of a CRO. He explained that the main functions of a CRO are three layered. In a top-down approach they define the vision and the high-level operating model for the risk, plans to translate the high-level aspirations into functional capabilities and builds the operational capabilities so as to support and enable the risk model.

He further discussed the risk management model in OCBC and emphasized the importance of recruiting people with the right attitudes and attributes for a successful risk framework. Then he moved on to discuss the post-crisis challenges, issues in risk management and the changing role of a CRO. He shared that, with the new Basel III rules, the CRO has resumed a more proactive role in managing risk across all businesses of an organization.

RMI’s Credit Rating Initiative Attracts Attention at International Conferences

In November, RMI's researchers were invited to speak at two international conferences in Beijing and New York respectively on its not-for-profit credit rating initiative (CRI). An overwhelming response was received and both conferences' participants, mostly from the financial industry, have expressed great interest and support in this undertaking which inaugurated a new route for developing credit rating methodology.

In Beijing, Prof. Jin-Chuan Duan, RMI's Director, and lead of the CRI and Ms. Xu Weiwei, research fellow and lead of the Market Monitoring Team, spoke at the China Financial Risk Managers' Forum to over 300 delegates, with the intent to promote the CRI in China. Prof. Duan gave a speech in the first day's general forum about the initiative on 5 November. Other speakers in the same panel were David Li, CRO of China International Capital Corporation, and Cao Jin, chief representative of Moody's Analytics in China. On the next day, Ms. Xu Weiwei presented the credit analyst survey as part of the initiative.

On 9 November, Dr. Oliver Chen, RMI’s senior research fellow and CRI’s deputy lead, presented at The International Association of Credit Portfolio Managers (IACPM)’s Fall General Meeting in New York, which attracted nearly 300 participants from the financial services industry. Other panel discussants included Mark Almeida, President of Moody’s Analytics, Dr. Don van Deventer, Chairman and CEO of Kamakura Corporation. The session was chaired by Som-lok Leung, Executive Director of IACPM.

While all three represented groups that provide  quantitative estimates of corporate probabilities of default, Moody’s Analytics and Kamakura are the commercial counterparts to RMI’s non-profit initiative. Consequently, the panel discussion centered on different business models of delivering credit rating information. Dr. Chen described the CRI’s “selective Wikipedia” approach. He stressed that CRI’s non-profit nature allows the initiative to be open-source in the sense that the implementation details are made available to all interested parties, and they are able to suggest changes and innovations in order to improve the model. It was agreed among the panel that RMI’s CRI has great potential to be a useful complement to commercial providers and to be a force in driving innovation.

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Published quarterly by Risk Management Institute, NUS
Editor: Ivy Wang (rmiwy@nus.edu.sg)