A Comprehensive Enterprise Risk Management Report: Standard Chartered

This report delves into the Enterprise Risk Management (ERM) practices of Standard Chartered Bank (SCB). It begins with an introduction to ERM, its aims and objectives, and an overview of SCB's operations across various countries. The report identifies past problems faced by SCB, such as share price underperformance and regulatory fines, as well as challenges faced by the banking sector, including cybercrime and economic downturns. It analyzes applicable regulations like the Data Protection Act and Cybercrime Act. The report further explores potential opportunities for SCB, such as innovative technologies and market expansion. Finally, it assesses and scores specific risks faced by SCB, including meeting quality requirements, assessing their likelihood and impact, and determining acceptable risk thresholds. The report concludes with mitigation actions for identified risks.

ENTERPRISE
RISK
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
a) Aims and objectives of Standard Chartered.......................................................................1
b) Problems which organization has encountered in past......................................................2
c) Problems which other organizations have encountered in same sector.............................4
d) Regulations applicable for the banking organization sector..............................................5
e) Potential opportunities that enhance the company performance........................................5
f) Identifying, assessing and scoring each risk.......................................................................6
g) Defining the Acceptable Risk Threshold.........................................................................10
h) Identifying mitigation actions for risk which are stated...................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Enterprise risk management is considered as a process of planning, organizing, leading
and controlling different types of activities within business organization for minimizing the
effect of risk on ventures capital as well as their profits and earnings. This enterprise risk
management expands up the process and not just includes the accidental losses but also tries to
cope up with the financial, strategic, operational and different types of other risks (Hoyt and
Liebenberg, 2011). In this context, the organization undertaken for the present study is Standard
Chartered Bank (SCB) which is a British multinational banking and financial services company.
Mentioned organization have network of more than 1200 branches and different outlets including
subsidiary associates and joint ventures across more than 70 countries and employing a strength
of more than 87000. In relation to enterprise risk management, this present report focuses on the
different aims and objectives of organization.
Further, this report will discuss the various problems which organization have
encountered in the past and also the problems which mentioned organization is facing in the
same industry. This report will significantly showcase the opportunities and threats which
organization are facing or can have in order to have competitive advantage over other banks.
a) Aims and objectives of Standard Chartered
Standard Chartered is a universal bank which have operations in consumers, business
corporate and institutional banking along with the treasury services. Even after the mentioned
company having headquartered in UK, company has almost 90% of its profits and revenue from
Africa, Asia and Middle East (McNeil, 2013). The aims and objectives of Standard Chartered
bank are as follows: Vision- Organization vision is to lead with examples within the market in which company
is operating. Organization further focusing in contributing to economic growth through
core business activities and also mentioned organization is contributing their best to
protect the environment. Moreover, Standard Chartered has long valued and strong
relationship bond with their customers, government, corporate friends and regulators and
organization further seeking interest to attract more and more of them. In context to this,
mentioned banking sector have experience of more than 150 years of business in these
markets.
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 Mission- Standard Chartered mission is to create exceptional value for clients, investors
and also for their potentially talented employees. Further, mentioned banking unit is
focusing on giving effective solution to their customers for the grievance they have so
that they can make an effective name in marketing leadership (Bainbridge, 2009). Core values- Standard Chartered have employees who are creative thinkers and these
employees are quite excited with the new challenges as it motivates them to work with
fresh thinking and also with an open mind. Organization is responsible for their
customers and influences their beliefs in fulfilling the promises which has committed to
them. Further, organization is able to achieve their goals and objectives just because they
have trust of their customers and Standard Chartered is doing crucially well in order to
achieve the promises which they have made.
 Objectives- Objectives are generally considered as a specific goal which reflects the plan
of actions and Standard Chartered is following their objectives in a significant manner in
order to get closer to the vision and mission of organization (Gordon, Loeb and Tseng,
2009). Some objectives are mentioned below:
◦ To maximize the profit with more of customer satisfaction
◦ To earn and increase the revenue by providing the best and improved customer
service.
◦ To guarantee high return on investment to customers by investing in organization
different products and services.
b) Problems which organization has encountered in past
Despite of being a global banking sector, SCB facing some challenges like under
performance of share price, shortfall of capital and a growing cost base which is significantly
increasing out of proportion for banking future business prospects. SCB facing a tough
competition from their global rival HSBC bank (Duckert, 2010). Further, mentioned company is
making a point to stay in UK or not as only 10% of the revenue comes from their and rest comes
from Africa, Asia and Middle East. Further, mentioned company is planning to set a new
organization is Asian market, Singapore or Hong Kong and it can be well cheaper in short run of
the business. It is because organization is facing a heavy levy which is affecting organization
balance sheet (Standard Chartered. 2015).
2

Further, Standard Chartered is facing another substantive fine from US regulatory market
as the profit of SBC has fallen down by 20% in the year 2013. Moreover, some other problems
faced by company are: Customer’s demand- SCB is facing enormous difficulty in maintaining and fulfilling the
demands of their customers throughout the globe. Core objective of the company is to
give best of the return to the investor for the capital which they have invested in the bank
and also the shareholders who are contributing a part of it (Moeller, 2011). Organization
is not able to provide best of the result and currently they are suffering for the dilemma
of the result. Recruitment of employees- Recruitment procedure of mentioned bank is not stable as
they do not have effective recruitment policy and the candidates who get the selection
lacks in knowledge in order to comply and answer to the questions of customers.
Moreover, the major issues faced by the company are to acquire the workforce from the
market (Sweeting, 2011). The talent pooling to create a differential position within the
economy.
 Meeting quality requirement- The need of a particular customer differs from person to
person as individuals have different perception and they want a policy which satisfies
their needs and wants in a significant manner. Just because global banks having effective
policies and they are giving a stiff competition to SCB. Banks like HSBC having high
market share and particular bank has gained the trust of the customers in UK. This is the
only reason why organization is not able to set an effective position in UK.
c) Problems which other organizations have encountered in same sector
In 2015, SBC and many other banking institutions have encountered the biggest
challenges in the banking sector. Some of them have been discussed below: Cybercrime- It is now common to read in newspaper and articles that bank robbery has
taken place. Criminals entering to the branch of the bank and they have physically taken
the money out from the bank building. In order to stop such a crime, banking
organization have to introduce more effective security system which will help in reducing
such kind of offences and crimes (Pagach and Warr, 2010). Domestic cultural issues- Banking organization have to make an effective cultural change
by considering the needs and demands for customers (New Standard Chartered CEO
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faces tough choices in fixing the bank. 2015). In a decade or so, banking sector in UK has
lost the trust of the individuals and in coming year these banking units will focus on
regaining the lost trust back. Stress testing- After seeing the banking crises in 2008, banking sector has concluded one
thing positively that they have to maintain an adequate capital reserve which will not
affect the performance badly as it is affected in earlier crises time. Banking organization
is focusing on invitation of capital from both customers and from the investors in order to
increase their capital turnover year by year.
 Might face another economic downturn- The outlook is not looking promising as China is
facing more unrest in Hong Kong and their economy is sloping down which is affecting
the performance of banking sector (Nocco and Stulz, 2006). Further, Western economies
are also struggling to meet out the expected growth rates and also the instability in the
Middle East country which is a major concern for the banking sector.
d) Regulations applicable for the banking organization sector
Banking organization focuses on delivering the quality of new services to their
consumers in order to satisfy their potential needs and requirements. Further, banking
organization has to follow some safety and security regulations in order to create an effective
impact of working system (McNeil, 2013). Some of them have been explained below: Data protection act: This is the major privacy policy for banking ventures as it helps in
developing the effective code of conduct for data security of all the personal data of the
consumers and also of their employees (Arena, Arnaboldi and Azzone, 2010). Cyber crime act- There exists a Computer Misuse Act, 1990 which is an act of
parliament of UK which makes provision on securing the computer material from any
kind of unauthorized access. This act is now become as a model and many banking
organizations are following in order to get rid of cyber criminals. Banking act, 2009- For protecting the depositors and to maintain the financial stability,
banking act gives power to the banking institutions to deal with the crisis whenever
organization feels the same.
 Transparency information: The banking sector has adopted the effective measures of
information transparency for creating the clear availability of data to customers. This
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makes the information regarding investment and business operations easily accessible to
all interested parties. This will be helpful for investors, shareholders and customers.
e) Potential opportunities that enhance the company performance
 Removal of international trade barriers- This will have a short term impact on
mentioned banking sector which will help in adding the values. Further, this qualitative
factor will lead towards decrease in cost and increase in profit.
 Arrival of innovative technologies- This will have a long term positive impact on SCB
as it will decrease the cost and increase the profit. It is a factor which need to be adopted
as soon as possible as there are lot more banks who are giving stiff competition to SCB
(Aebi, Sabato and Schmid, 2012).
 Growing up of Forex market- SCB can develop their new franchisee in different cities
of countries where they can enhance their revenue and profitability. It is significantly true
that mentioned company getting 90% of their profits from Asia, Africa and Middle East
countries.
 Merger and acquisition- Standard Chartered bank with the help of merger and
acquisition can extend their working profile in different countries. With help of merger, 2
firms will be putting investment in order to achieve and satisfy the needs and demands of
individuals (The banking industry's biggest problem isn't bonuses or market share. 2015).
f) Identifying, assessing and scoring each risk
Threats for Standard Chartered Bank
5

Risk
No. Risk
Description
Risk Information sources
(i.e. references from
research)
Likelih
ood (1-
5)
Impact
(1-5)
Risk Rating
(Likelihood
x Impact)
Score
above
accept
able
level
1
Meeting
quality
requirement
For overcoming the
marketing sensitivity,
mentioned banking sector
have to set major goals and
objectives. Further, SCB
have to follow all the
banking laws and
regulations which will
assist them in proper
functioning and also lead
towards the quality
requirements.
The need of a particular
customer differs from
person to person as
individuals have different
perception and they want a
policy which satisfies their
needs and wants in a
significant manner. Just
because global banks
having effective policies
and they are giving a stiff
competition to SCB. Banks
like HSBC having high
market share and particular
4 4 16 Yes
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bank has gained the trust of
the customers in UK. This
is the only reason why
organization is not able to
set an effective position in
UK.
2 Competitors
Standard Chartered bank is
facing a tough competition
from:
1.ABN AMRO Bank
2. Barclays Bank
3. Royal Bank of Scotland
4. Goldman Sachs Group
5. J.P. Morgan Chase
6. BNP Paribas
7. HSBC Holdings
8. Wells Fargo
9. Barclays
10. Morgan Stanley
11. UBS AG
3 5 15 Yes
2
Changing
demands
Demands of customers are
the major propagation
which SBC have to follow
in order to make a loyal and
positive clientele base.
Organization have to come
up with different new
schemes and policies which
will attract their mind for
investing in company.
3 4 12 Yes
7

Further, SCB is facing
enormous difficulty in
maintaining and fulfilling
the demands of their
customers throughout the
globe (Moeller, 2011).
Organization is not able to
provide best of the result
and currently they are
suffering for the dilemma
of the result.
2
Lack of
talented
employees
Multi tasking and
potentially talented
employees are found by
effective researching and
mentioned banking sector
have to make effective job
specification and
description and need to find
a candidate who will help
organization in order to
achieve the needs and
demands (Simkins and
Ramirez, 2008).
Recruitment procedure of
mentioned bank is not
stable as they do not have
effective recruitment policy
and the candidates who get
the selection lacks in
knowledge in order to
2 4 8 No
8

comply and answer to the
questions of customers.
Further, SCB not having
proper training and
development program in
order to train employees as
the mentioned bank do not
want to waste their crucial
time in such types of
activities. However,
organization is
misunderstanding the
concept of training the
development as all the
expenses which are
incurred in training and
development will be gained
in long run of the business.
Moreover, the major issues
faced by the company are to
acquire the workforce from
the market (Sweeting,
2011). The talent pooling to
create a differential position
within the economy.
Opportunities for Standard Chartered Bank
9

Risk
No. Risk
Description
Risk Information sources
(i.e. references from
research)
Likelih
ood (1-
5)
Impact
(1-5)
Risk Rating
(Likelihood
x Impact)
Score
above
accept
able
level
1
Removal of
international
trade
barriers
With the removal of trade
barriers, mentioned banking
sector can start functioning
with either small or no
restrictions from the
government. The
investment which will be
made by customers and
investors will be highly
returned annually and
corporate will be able to
develop more of the
goodwill (Berger, A. N.,
Hasan and Zhou, 2009).
3 4 12 Yes
10