Risk & Regulations

Why Risk & Regulations?

The continuously changing regulatory landscape is one of the main challenges for all financial institutions, regardless of their size. Regulators, clients, and society demand that regulations are well embedded across the entire financial sector. Today, compliance is more than just meeting regulatory demands; it’s a way of doing business globally.

Increasing cooperation among competent authorities: The EU’s co-legislative system is complex. While the European Commission, European Council, and European Parliament are the main bodies in the law-making process, other competent authorities also play important roles in ensuring the consistent application of EU financial regulations and the supervision of financial institutions across member states. These authorities include the European Banking Authority (EBA), European Securities and Markets Authority (ESMA), European Insurance and Occupational Pensions Authority (EIOPA), European Central Bank (ECB), Dutch Central Bank (DNB), and more.
Geopolitics and climate risks: We have seen that financial regulations are evolving rapidly to address emerging risks. Beyond traditional risk categories, financial institutions are now required to effectively assess and manage their exposure to geopolitical and climate-related risks, both in the short term and over the long term.
Demonstrating compliance is a must: Not only must a company comply with regulations, but this compliance must also be evident to third parties such as regulators, clients, and society.
Non-compliance is not an option: Non-compliance can lead to significant legal, financial, operational, and reputational consequences, making compliance as crucial as business growth. Adhering to regulations is vital for ensuring a stable, trustworthy, and legally compliant business environment.

Why Probability?

Pragmatic approach: Based on our experience with multiple organizations of all sizes, we have developed our own pragmatic methodology for a balanced approach, focusing on a full compliance and efficiency.
Experienced professionals: Our professionals are highly experienced in financial and non-financial risk management, regulations, modelling and governance. Our team comprises highly experienced practitioners, consultants and academics.
Extensive expertise: We have expertise in the following topics: Basel III/IV, CRR, CRD, IFRS9, FRTB, ESG, IRRBB&CSRBB, EMIR, BCBS 239(PERDARR), GDPR, Solvency II, IFRS17, and more.

Regulatory Lifecycle – What needs to be done?

New or changes in the regulations

Maintain a complete overview and timely update of all existing and new regulations.
Establish procedures and clearly define roles and responsibilities at all organizational levels.
Ensure adequate expertise and resources.
Regularly maintain and update documentation.

Regulatory assessments

Roadmap and planning

Implementation

Review and validation

Conduct an independent review or validation following the 3LoD model, such as an internal audit.
Ensure sufficient involvement of the board member following the internal governance framework.
Develop adequate controls systems such as data validation checks and the four-eye principle.
Establish formal process for the discussions and preparations for supervisory dialogues, such as a remediation plan for the supervisory On-site Inspection(OSI’s).

Our Approach

We help your organization stay up-to-date of the latest regulations. We establish effective monitoring of compliance at both central, entity and departmental levels.
We develop a comprehensive understanding of the impacts in the relevant areas for your organization and help you proactively prepare for compliance and remediation.
We deliver hand-on solutions to address identified gaps and provide subject matter expertise in technical areas.
We facilitate your organizations with internal communications across different lines of defenses (e.g., internal audit, compliance, business) and external communications (e.g., supervisors, external auditor).
We provide trainings to enhance knowledge sharing across teams and functions. We host workshops and provide insights from the industry and peers.

Themes

We understand the complexity of the international and EU legislative framework, we demonstrate our experiences in these subjects and areas.

Credit Risk

Our colleagues have many years of experience with credit risk management and modeling of AIRB and IFRS9 compliant models for retail, wholesale, and leasing portfolios.

Market risk

Our Trading Quant team excels in developing and validating trading book risk models, together with our colleagues in academia. We have extensive experience with FairVA and AVA models, as required by IFRS13 and CRR3, and Securitizations.

Operational risk

We have extensive experience and support various financial institutions in compliance assessments of regulatory guidelines and standards, such as DORA and EBA guidelines on outsourcing arrangements. We have supported institutions with implementation and remediation in line with regulatory expectations and industry practices.

ICAAP/ILAAP

We have extensive experience in Pillar 2 and SREP assessments, including regulatory gap analysis and reviews, economic capital modeling, ICAAP/ILAAP stress testing, and the execution of ICAAP and ILAAP reports.

Supervisory reporting /Pillar 3 disclosure

We have extensive experience in assessing and implementing supervisory reporting (e.g., COREP, FINREP, LCR/NSFR and other DNB reporting) and Pillar 3 disclosure, our experience include establishing reporting policies and procedures, conducting assessments, and implementing and validating data requirements in line with supervisory expectations.

IRRBB&CSRBB

We offer many years of management- and consulting experience in senior ALM roles. The IRRBB Service Line covers all topics, from prepayment– and NMD modeling to EaR and CSRBB. We have also done a lot of work in liquidity risk management and the IBOR-transition.

ESG

Our ESG service line is specialized in building methodologies to measure climate and nature risk, collecting and processing corresponding data and integrating the outcomes into existing risk models, policies and processes. We have established climate risk stress testing frameworks for several clients and published several ESG papers in cooperation with data provider Refinitiv.

Liquidity risk management

We offer experiences in developing and enhancing liquidity risk policies, risk appetite statements and risk identification standards, establishing cash management process and controls and updating of the regulatory reporting models and policies for the LCR, NSFR, AER and ALMM.

Recovery and resolution planning

We have extensive experience in the regulatory gap analysis and reviews of the BRRD2 and BRRD3 and the execution of recovery plan.

BCBS239

We have extensive experience in regulatory assessments and implementation of the risk data aggregation and risk reporting in line with the BCBS 239 requirements. Our support includes gap assessments and remediation of data governance framework, data quality and data management.

Internal governance

We are experienced with executing a Strategic Risk Assessment, supporting the development of a Risk Appetite Statement, conducting a Risk Framework Review, and setting up a Policy House. We are also experienced trainers for management- and supervisory board members.