Mumbai:
The Professional Risk Managers' International Association (PRMIA), having presence in 45 countries, launched its first chapter in India on Aug 21, 2018 in Mumbai.
Delivering the inaugural address, Rabi N Mishra, Principal General Manager,Risk Monitoring Department, Reserve Bank of India,spoke about the vital role played by risk management in ensuring trust within the financial system, especially considering that risk was in essence a raw material for the financial sector which was hence inherently crisis prone.
Explaining the inadequate system with the Indian banks that is providing scope for rising frauds, he said that in the matter of credit operation, the banks are adopting standardised models wherein the employees are feeding the information about borrower in a scoring model/software and the entity borrowing eligibility/borrowing cost/riskiness is calculated thereof.
“This is not helping in adequate skill development of the employees and an employee with malafide intent who understands these appraisal models well can be hand in gloves with a borrower not having sufficient credit worthiness and can game the bank to increase the eligibility or reduce the borrowing power.'' he said.
“A similar issue is the gap in accounting skills after the adoption of Core Banking Solutions by banks. This skill gap may lead to a fraud in a bank by a particular employee who understands the system better than others. There are few recent instances of big frauds happening due to this ethics deficit and the knowledge of few ethical staff members bringing these frauds into light,’’ he said.
There is thus the need in the banks to have such systems in place, that it is very difficult for an unethical behaviour to profit. Increasing knowledge of staff, involving more people in operations where money involved is high, frequent staff rotation in routine operational work, proper manuals for IT work with supporting documents for rationale behind the operations being done in these platforms are few suggestions that banks can look at to contain this risk, he suggested.
Mrityunjaya Mahapatra,deputy managing director ( Strategy) and Chief Digital Officer, SBI , explained how the future earnings of banks would come from monetizing data and insights, rather than the traditional model of simply taking deposits, lending and investing and the paradigm changes this would imply for Risk Management .
Shailesh Dhuri,Executive Director, Decimal Point Analytics, spoke of how Artificial Intelligence and Machine Learning were now being employed to make sense of the world by analyzing unstructured data and using these insights for credit risk management .
A panel discussion on `Fraud Risk' was moderated by Sanjay Sharma, Global Director, PRMIA with participation from Jayant Saran, Partner Deloitte Touche Tohmatsu and Ajay Panchal , Vice President Risk Management, Future Generali Insurance Company. This discussion highlighted the challenges in managing fraud risk in the absence of physical " last mile connectivity" to customers and the convergence of local trends in fraud risk management with global trends.
Initially, established in the United States in 2002, PRMIA, now operates in 45 countries and is recognized for competency-focused training, professional certifications, global networking and online resources that reinforce the skills and knowledge of Risk Professionals , to help them cope with the emerging challenges of the banking and financial sector, said Sharma.
According to NirakarPradhan , PRMIA's representative for Asia Pacific, the launch of PRMIA's Mumbai chapter recognizes the fact that India is poised to emerge as the fastest growing major global economy and that a sound risk management infrastructure is the backbone of any financial enterprise.
Shantanu Srivastava, Regional Director, PRMIA, said that the Indian chapter seeks to shape the future of the risk management discipline in India by providing a platform for a wide range of stakeholders to engage and cross-fertilize ideas, share best practices and participate in PRMIA's globally recognized education, accreditation and membership programs.