Risk Management

RISK MANAGEMENT

Daily Tasks

    

Limits setting for trading Online monitoring of mark-to-market & analysis Pay-out processing- funds and securities Compliance Recovery

7 C’s  Cost of mistake      

Concepts Common Sense Communication Concentration Compliance Character

Cost of mistake  5paisa Vs Rs100

Concepts       

Ledger balance Undelivered Stock ALB GHV ZHV THV AHV (Haircut 15%,30%,45%,100%) contd…

Concepts     

SPAN GHV COVER Collateral Uncleared Cheques Margin Trading

Common Sense       

Feel from personal meeting Check personal/ professional background Read the signals Materiality Mental calculations Trading pattern Track record- Payment, Promises

Communication  Clear communication to customers, sub-ordinates  Documentation must  Changes in rules, policies

Concentration    

Client Location Franchisee Product

Character  Subjective judgments required many times  Employees must have high degree of integrity  Any evidence of customer trying unfair means must be brought to notice of seniors  Doing a wrong and turning a blind eye are similar offences

Compliance      

Understand basics Broker Client Agreements Power of Attorney Running account Letter Contract notes Ledger copies

Soft Skills  Understanding of the Markets & how it works  Understanding of the Branch & Relationship Manager  Understanding of clients credibility & positions  Sensitivity to business requirements  Communicate clearly & Listen hard

To Reiterate  Risk Management is rule based – what is written can be read by all  Assume funds will not come from a customer who is out of money  Stock is not adequate cover  Risk Management is Dynamic  To be a good Risk Manager, it is not necessary to have market view  Not get influenced by emotional blackmail

Most Importantly  Risk Management is not only sticking to set procedures,but to find the solution by application of logic & human touch to the situation at hand.

Thank You