6.1 BROC responsibilities

• 1. Develops a formal enterprise risk management plan which contains the following elements:

  (a) common language or register of risks,

   

  Common language of risk

  • refers to a standardized set of terms and definitions used to communicate about risks within an organization.

  This common language ensures that everyone involved in risk management discussions and activities understands the risks in the same way, reducing the potential for misunderstandings or misinterpretations.
• Risk register

  • is a document used in risk management to record and track potential risks that could affect a project, program, or organization.

  It typically includes details such as the nature of the risk, its potential impact, the likelihood of occurrence, mitigation strategies, and the current status of the risk.

  The risk register helps stakeholders identify, assess, and prioritize risks and develop and implement risk response plans.

  It is a key tool for proactive risk management, enabling organizations to anticipate and address potential issues before they become significant problems.
• BROC develops a common language or register of risks to ensure a standardized approach to identifying, categorizing, and describing risks across the organization.

  This helps in fostering a shared understanding of risks and facilitates effective communication.
• (b) well-defined risk management goals, objectives and oversight,

   

  The BROC sets clear and measurable risk management goals and objectives to guide the organization's risk management efforts.

  They also establish oversight mechanisms to monitor and evaluate the progress toward these goals.
• (c) uniform processes for assessing risk and developing strategies to manage prioritized risk

   

  The BROC develops uniform processes for assessing risks and developing strategies to manage prioritized risks.

  This ensures consistency and effectiveness in identifying, analyzing, and responding to risks.
• (d) designing and implementing risk management strategies and 

   

  The BROC designs and implements risk management strategies to address prioritized risks.

  This includes developing action plans, allocating resources, and monitoring progress.
• (e) continuing assessments to improve risk strategies, processes and measures;

   

  The BROC conducts regular assessments to evaluate the effectiveness of risk strategies, processes, and measures.

  This includes identifying areas for improvement and implementing changes as necessary.
• Oversees the implementation of the enterprise risk management plan

  1. Through a Management Risk Oversight Committee

  2. Conducts regular discussions on the company's prioritized and residual risk exposures based on regular risk management reports

  3. Assesses how the concerned units or offices are addressing and managing these risks
• BROC


  Oversees the Implementation of the ERM Plan
• Overseeing the Implementation of the ERM Plan


  Ensures a structured approach to managing risks across the organization
• Conducting Regular Discussions on Risk Exposures:

  • The BROC holds regular meetings to discuss the company's prioritized and residual risk exposures.
  • These discussions are based on detailed risk management reports that provide insights into the current risk landscape of the organization.
  • The committee uses these reports to identify and analyze key risks that could impact achieving the organization's objectives.
• Prioritized risk

  • refers to the risk identified as most significant or impactful to the organization.

  These risks are typically ranked based on their likelihood of occurrence and potential impact on the organization's objectives.

  Prioritizing risks helps organizations focus their resources and efforts on managing the most critical risks first.
• Residual risk

  is the risk to achieving objectives that remain after management’s responses have been developed.
• Evaluating the Risk Management Plan

  1. BROC reviews the organization's risk management plan

  2. Examines whether the plan aligns with the organization's objectives, strategies, and risk profile

  3. Evaluates the comprehensiveness of the plan, ensuring it covers all key areas of risk relevant to the organization's operations
• BROC


  Revisits defined risk management strategies, looks for emerging or changing material exposures, and stays abreast of significant developments that seriously impact the likelihood of harm or loss
• The BROC thoroughly reviews the organization's risk management plan to assess its relevance
• Revisiting Defined Risk Management Strategies:

  • The BROC revisits the organization's defined risk management strategies as part of its evaluation process.
  • This involves reviewing the effectiveness of existing strategies in mitigating risks and identifying areas for improvement.
  • The committee may recommend the risk management plan changes to enhance its effectiveness based on the latest insights and developments.
• Monitoring Emerging or Changing Material Exposures:

   

  • The BROC stays vigilant for emerging or changing material exposures that could pose significant risks to the organization.
  • This involves monitoring industry trends, regulatory changes, and other external factors that could impact the organization's risk profile.
  • By staying abreast of these developments, the committee can proactively address emerging risks and ensure that the risk management plan remains relevant and effective.
• 1. Advises the Board on its risk appetite levels and risk tolerance limits;
• Risk appetite

  is the level of risk that an organization is willing to accept while pursuing its objectives, and before any action is determined to be necessary in order to reduce the risk.
• Risk tolerance

  ·is the degree, amount or volume of risk impact that an organization or individual is willing to withstand.
• The Board Risk Oversight Committee primarily advises the board

  • because the board of directors holds ultimate responsibility for overseeing the organization's activities, including risk management.

   

  The board sets the organization's strategic direction and evaluates its performance against strategic objectives.
• Risk appetite and tolerance

  are integral components of strategic planning, and the committee's advice helps the board integrate risk considerations into strategic decision-making processes.

  One of them is allocating resources.

  The board allocates resources and the committee's advice on risk appetite and tolerance informs resource allocation decisions.
• Advice from the Committee:

  After conducting a thorough risk assessment, the BROC advises the board that entering the new market presents several risks, including political instability, regulatory uncertainties, and currency exchange fluctuations.

  The committee then, recommends a balanced risk appetite.
• Resource Allocation Decision:

  • Based on this assessment, the board decides to allocate resources to support the expansion into the new market.

  This includes funding for market research, establishing local operations, hiring personnel, and implementing risk mitigation measures, such as securing political risk insurance and hedging against currency fluctuations.
• 1. Reviews at least annually the company’s risk appetite levels and risk tolerance limits based on changes and developments in the business, the regulatory framework, the external economic and business environment and when major events occur that are considered to have major impacts on the company;

   

  Adaptation to Business Changes:

  The business landscape is dynamic, by reviewing risk appetite levels ensures that the company's risk tolerance remains aligned with its strategic objectives and current business operations.

   
• Compliance with Regulatory Framework:

  • Regulations and compliance standards frequently evolve, impacting the risk landscape for companies.

  Regular reviews help the company stay updated on regulatory changes and ensure that its risk management practices remain compliant with relevant laws and regulations.
• Response to External Economic Environment:

  • External economic factors, such as market trends, geopolitical events, and economic cycles, can significantly affect a company's risk exposure.

  Reviewing risk appetite levels allows the company to adjust its risk management strategies in response to changing economic conditions.
• Assesses the probability of each identified risk becoming a reality

  1. Estimates its possible significant financial impact

  2. Estimates likelihood of occurrence

  3. Identifies priority areas of concern (risks most likely to occur and impact performance/stability of corporation and stakeholders)
• Proactive Risk Management & Stakeholder Protection


  The Business Risk Oversight Committee (BROC) assists the corporation by proactively identifying and assessing potential risks, enabling the implementation of measures to mitigate adverse effects and allocate resources effectively
• This approach

  Safeguards stakeholder interests (employees, shareholders, customers, suppliers), minimizing negative consequences on stakeholders and upholding trust and confidence in the corporation's operations
• 1. Provides oversight over Management’s activities in managing credit, market, liquidity, operational, legal and other risks exposures of the corporation. This function includes regularly receiving information on risks exposures and risk management activities from Management; and

  • Effective oversight of risk management activities is vital for a corporation's long-term success.

  By regularly receiving updates on risk exposures and management efforts, oversight bodies can proactively identify and address potential risks before they escalate, ensuring the organization's viability.
• Credit Risk Management:

  • The BROC monitors lending activities, counterparties' credit ratings, and loan delinquencies.

  They review these reports to ensure that management's credit risk policies and procedures are effectively identifying, monitoring, and mitigating credit risks.
• Market Risk Management:

  • The BROC assesses exposures to interest rates, forex, equities, and commodities.

  They review these updates to assess management's strategies for managing market risks and ensure alignment with the corporation's risk appetite and tolerance levels.

   
• Liquidity Risk Management:

  The BROC receives and analyzes liquidity position, funding sources, and stress testing results.

  They scrutinize these updates to verify that management is maintaining adequate liquidity and implementing strategies to mitigate liquidity risk under various scenarios.
• Operational Risk Management:

  The BROC reviews incident reports, operational risk assessments, and key risk indicators provided by management to ensure that effective controls are in place to address operational risks and prevent operational failures.
• Legal and Compliance Risk Management:

  • The BROC reviews the legal and compliance issues, regulatory developments, and pending litigation matters.

  They assess management's efforts to ensure compliance with applicable laws and regulations and mitigate legal and compliance risks effectively.
• 1. Reports to the Board on a regular basis, or as deemed necessary, the company’s material risk exposures, the actions taken to reduce the risks, and recommends further action or plans, as necessary.
• Material risk exposure

  is a quantitative or qualitative scenario where the exposure to danger, harm or loss has a material impact
• By concentrating on these risks, BROC reporting ensures that the board of directors can prioritize its attention and resources effectively, addressing the most critical threats to the organization's success.

   

  Additionally, material risks are often interconnected with strategic goals and key performance indicators, making them essential considerations for decision-making at the board level.

   

  Moreover, highlighting material risks enhances transparency and accountability, as it provides stakeholders with a clear understanding of the most significant threats facing the organization.