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Risk Management in the Securities Industry 2010


Almost every activity in the securities industry involves some level of risk and every firm is exposed to general business risks in addition to specific risks that must be identified, assessed, managed and controlled in conjunction with its internal control structure. Understanding the various risks that your firm is exposed to, directly or indirectly, may impact how you do business with your clients and how to react to initiatives from your compliance department. Effective design and execution of risk management practices and internal controls are necessities in managing risk.

A case in point is the severe impact the global financial debacle, largely attributed to the so-called subprime crisis, has had on investor confidence and the risk control methods firms employ. The occurrence of the crisis, its magnitude, its breadth, as well as the unprecedented steps taken by governments worldwide to mitigate it, raises significant issues of risk management. Could the crisis have been averted or its scope reduced? These questions, and many more, point in the direction of risk management, and the possible weakness thereof.

What You Will Learn:

The course will focus on the following:

  • The risk-based approach to compliance, which requires firms to identify potential risks and determine the resources available to address them. In essence, a risk-based approach attempts to balance between the significance of risks and the availability of resources, and tries to effectively allocate resources to higher-risk matters.
  • Risk assessment and management in the context of IIROC's Risk Trend Report (RTR) and the Sales Compliance Risk Assessment Model (SCRAM), which help identify, define, assess and weigh sales compliance risks in respect to each dealer member and ranks each members relative to all other members under IIROC’s jurisdiction, and to subsets or peer groups.