Chris Joles: Collaboration in Risk

Chris Joles is Senior Vice President and Enterprise Risk Officer with Planet Home Lending, Columbia, Md.

Chris Joles

The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views, policy, or position of Planet Home Lending LLC.

Today’s financial services risk managers face two recurring issues. First, our work makes some people feel defensive; and second, we have to analyze complex business lines and correctly identify the right issues to focus upon.

During my 15 years in the business, I have learned the best tactic to resolve both those challenges and get risk management and business units working together is to focus on process through transparency and collaboration.

When you focus on business processes, important insights emerge:

  1. Internal business leaders get excited. When people talk about what they do on a daily basis, they are engaged. People love to talk about what is important to them. Someone that is enthusiastic about their process is a prime candidate to collaborate on ways to enhance their process.
  2. When a risk manager focuses on process, they gain a deeper insight into operations and functions, and can overlay the risks into the processes. Internal partners get a process map they can use in their business, which increases buy-in. They can visually see, not just read, about where their risks lie, and where the controls are to manage their business.
  3. Looking at process and risk together makes it easier to spot gaps, and also to identify controls and risks that might not come up in conversation.

Evaluating Risk by Mapping Processes

To get an idea of how mapping processes can help identify risk, take a look at a real-life example:  A sub-servicer that gains a new client.

As a sub-servicing organization, you and your client will sign a contract that lists all the obligations and flow of information between your companies. Traditional risk management would have the risk manager and business unit leaders go through that contract together. They would identify anything that could go wrong and create actions to make sure those risks were guarded against. This process creates significant problems in tracking and execution, as most organizations move so swiftly that slowing down to make sure risks are covered rarely takes top priority

Mapping a process-based risk program creates a visual map from a written list of processes, controls, and oversight. In our sub-servicing example, we might start with the transfer and boarding of the loans and end with payoff. Along the way, the risk manager and business leaders can also identify actions that affect other departments, how long each action should take, and what happens next.

A detailed process map tells each team that touches loan servicing what their role is and what is required of them. It becomes the starting point of discussions.

Each group now knows its tasks and requirements instead of having to convert language based on their own subjective interpretation. The map is also a valuable business tool that can be shared with other internal stakeholders.

As a risk manager, a process map lets me rapidly identify where my oversight needs to be focused and what controls I need to have in place. The sub-servicing leaders gain better oversight into their process and easily see what they get from working with me.

Every time I need to come back and review this sub-servicing business, I am more efficient because the process map gives us a starting place that we both acknowledge is accurate. It saves us time we can use to move on to deeper issues. Once that foundation of trust is established, I find business unit leaders are more apt to talk about insights into challenges they face currently.

Working in a collaborative fashion on a process map lets business experts share their expertise. By gaining a deeper understanding of the business, a risk manager increases the chances of correctly identifying and ameliorating risks. And, in the final analysis, that improves results for everyone.