An integrative action research (IAR) on enhancing the quality of the risk and control metrics of the product control department

• Main Author: Tinio, Justine Denise F.
• Format: text
• Language: English
• Published: Animo Repository 2017
• Subjects: Banks and banking; Personnel mangement
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/5688
• Institution: De La Salle University

The Product Control Group (PCG) is a department in company XYZ that specializes in banking and financial services by providing financial reports to its counterparties in various countries by performing daily T+1 Profit and Loss to Front Office and Management, analyzing risk positions and their impact on P&L then submitting commentary to senior management. Considered as the Hub Center by the countries it caters to, the department is employing a shared services type of business. In this company, I work as a member of the Equities Team and one of the Risk and Control Coordinators in the department. Ever since the department was established in 2008, there have been issues with counterparties and internal auditors on the lack of risk and control metrics on the daily and monthly processes of the department. This stemmed from the employees lack of awareness on the risk their processes entails as well as a standardized metrics to monitor it. As a global financial services organization with a diverse set of products and services, the Product Control Group is at risk of both Internal and External Fraud on a daily basis. Fraud, material misstatements and related wrongdoing create legal and reputational risk in addition to financial losses, which, if not effectively addressed, may impact capital requirements which affects internal reports used by management to form projections such as earnings expectations and the reputation of both the bank and the department. The main objective of this study is to improve and implement high- quality metrics that are intended to protect, lessen and/or mitigate the bank from any reputational and operational risks from the eyes of the auditors and ensure appropriate review and governance prior to distribution of the internal and external reporting and disclosures. Through collaboration with the other Risk and Control Coordinators, the spirals of action research as the research design was used as the methodology and the conceptual framework used was Sadiq, Governatori & Namiris (2007) Interconnect of Process Management and Controls Management model in this study. In Cycle 1 of the action research, the issue of weak risk and control metrics was addressed by standardizing the Daily Functional Control Checklist (DCFC) and implementing an internal quarterly testing of processes called Manager Assessment Control (MCA). Although positive changes transpired with these improved metrics, issues with the standardization and insufficient management oversight was detected. Automation of the report was also suggested due to the lack of shared drive space to save the files for testing and to help the employees keep better track of the issues they encountered. As such, in Cycle 2 of the action research, the succeeding intervention was the implementation of the automated E-Control which became a reference point for control calls that helped to ensure that control issues are properly tracked and escalated.