In his many previous roles, including his current position as the Managing Director of Global Client Consulting, he has worked extensively with major financial institutions in the United States and across the Asia-Pacific region (Singapore, Australia, Hong Kong, Japan) including some of the largest and prestigious global and regional financial institutions. His experience includes implementing governance, technology & operational risk solutions, information security and internal controls across various lines of business such as Consumer Banking, Treasury, Asset Management, Private Banking and Securities Brokerage business operations and technology processes. He led risk identification, assessment and implementation of internal controls at several large global financial institutions and corporates, covering business front office, middle, back office and technology processes, and across multiple locations in the Asia-Pacific region and the US. He also designed and implemented a continuous controls monitoring and risk indicators reporting program for a large bank’s operations across the Asia-Pacific region. Steven also developed and directed implementation of bank wide information security, crisis management, contingency planning and business continuity program covering front, middle, back-office and technology operations for a top global bank for its regional operations in Asia.

Steven Lee will replace Christopher Laursen as the Co-Regional Director of the DC Chapter, and will serve alongside Thomas Day. As chapter leader, he and the DC Steering Committee plan to encourage risk professionals and regulators to engage each other on common challenges. They hope to create a platform for active dialogue and engagement among members and the industry across a wide range of risk agendas. Many of these are highly challenging and still need much clarity to support effective implementation in our respective environments: boards, management, front office, middle office, back office, as well as covering global & cross-border considerations, regulatory challenges, dealing pro-actively with incentive structure dislocations and misalignments. He feels that PRMIA events, education, continuing learning, newsletters, and many other avenues provided should center around raising the bar, to bring to our members what is truly beneficial towards their advancement and careers as regulators and risk professionals. They hope to mobilize and energize our members to engage actively PRMIA and each other, using PRMIA as the platform towards these objectives.

PRMIA would like to acknowledge the Steering Committee members of the DC chapter, who will help the chapter achieve its goals. Please find the members below:

• Marlon Attiken, IBM
• Oluwaseyi Awoga, Consultant
• Paul Bond, Paul Bond and Company
• Jim Embersit, Ernst & Young
• Pamela Gogol, FHFA
• David Green, Angel Oak Capital
• Ashtish Gupta, Fannie Mae
• Nicholas Kiritz, Constellation Energy
• Keith Ligon, FDIC
• Kennan Low, UBS Financial Services Inc.
• Timothy McDonald, Boston Private Bank & Trust Company
• Weihua Ni, Analyst
• Tim Prindle, Ofice of Thrift Supervision
• John Schwitz, Defense Intelligence Agency
• Lindsay Steedman, Federal Reserve Board
• Kevin Stemp, Office of Financial Stability

We have just seen the close of 2011, a year which perplexes most of us who try to make sense of world events and global markets. Major world events seem to occur at will, and virus-like with far higher frequencies and in quick succession than could be expected from historical data. Many rare and extreme events just sprout out, and some of these include:

The Japan earthquake and tsunami that devastated lives and properties, raised risks of nuclear leaks and disrupted global supply chains,
The Arab-spring and middle-east uprising culminating in the fall of long established regimes - from Egypt to Libya,
The social unrest in the UK, one of the worst in decades, and the global Occupy movement that underly social frustrations from failing economies,
The soaring of sovereign debts of major OECD countries to unsustainable levels and the spate of policy accommodations and central bank easing actions to keep the economies going.

What we have seen in 2011 is rising “uncertainty”, in the sense of Frank Knight’s distinction between risk versus uncertainty. With the culmination of events and the after effects - leadership changes in the middle-east, North Korea, and many key events set to occur like major elections in the US and Russia, the degree of “uncertainty” which we will see in 2012 will likely be no less dramatic than what we have witnessed in 2011. We can expect a highly eventful 2012 that will keep us, as risk practitioners busy on many fronts. Understanding the ramifications of potential events alone will be a challenging task. There are many others which we have discussed briefly in previous issues.

For one, the implementation of the Dodd-Frank Act will start realizing sweeping changes across the financial services industry here in the US and will ripple across to financial centers in the Atlantic and the Pacific. In this issue, we bring to you a number of interesting articles to help shed more insights on issues highlighted above. Uncertainty is more dangerous than risk articulates well the important distinction of uncertainty versus risk and the implications for us in risk management. Knowing what we can see on the horizon, 2012 indeed looks like yet another year of living dangerously. The continuing Eurozone debt crisis and democracy deficit shows the cracks of an economic union without a meaningful political union exacerbated by the removal of the currency devaluation safety-valve. We have provided some references and links in our RiskResources column on Eurozone and Sovereign Risks that you might find helpful.

There is constant debate on what caused the 2008 financial crisis, one of which is the whole question of systemic risk. We have included one perspective in the article Magical Thinking: The Latest Regulation from the FSOC which argues the presumption of interconnectedness should be challenged.

We received requests for more hands-on and technical articles that would be helpful to risk practitioners. In this issue, we included articles on Managing Liquidity Risk in the Age of Basel III, Fair Valuing Illiquid Assets, and A Method of Measuring Risk Appetite. To help us stay abreast of developments in the regulatory front, we continue to highlight some recent proposed and finalized rules in our RiskRegulations.

This is probably something you noticed first. We have adopted a new format for our publication for the New Year. We hope you will like the new format and find it more user friendly and readable. We welcome your feedback and suggestions that you might have so we can continue to improve. Finally, we would like to thank many who made this possible, especially to all our contributors for sharing their thoughts through our RiskJournal. Enjoy the RiskJournal as we brace ourselves for the ride through 2012.

Steven Lee, Global Client Consulting
Editor RiskJournal
Deputy Regional Director, PRMIA DC

Steven Lee, New Deputy Regional Director
Steven Lee, Managing Director responsible for Governance, Risk & Compliance at Global Client Consulting. Mr. Lee's specialties include governance and enterprise risk management, and currently developing integrated compliance and risk management solutions for clients, specifically solutions around Volcker Rule implementation and Dodd-Frank compliance. He has more than 25 years international consulting, audit and risk management experience including work with some of the largest US, European and Asian financial institutions in the United States and across the Asia-Pacific region, including Singapore, Australia, Hong Kong and Japan.

One of his key reasons for taking an active role in PRMIA is to encourage risk professionals and regulators to engage each other on common challenges. He hopes to create a platform for active dialogue and engagement among members and the industry across a wide range of risk agendas. He feels that PRMIA events, education, continuing learning, newsletters, and many other avenues we provide should center around raising the bar, to bring to our members what is truly beneficial towards their advancement and careers as regulators and risk professionals. He hopes to mobilize and energize our members to engage actively PRMIA and each other, using PRMIA as the platform towards these objectives. He will seek to continue to improve our PRMIA platform for engaging our members and the industry, and propel ourselves as a premier organization that will be truly recognized by regulators, governments, and industry globally as THE VOICE on policy and risk matters.

Jim Embersit, New Steering Committee Member
Jim is the Executive Director – Financial Services Risk Management with Ernst & Young LLP. He advises E&Y global financial services clients on risk management issues and evolving supervisory policy trends with a focus on developing business-practical solutions to specific regulatory directives or concerns. Jim was formerly the Assistant Director of the Board of Governors of the Federal Reserve System, Division of Banking Supervision and Regulation. As a former Federal Reserve Official, he established regulatory/supervisory programs and standards for the risk management of banking organizations’ trading and dealer activities, interest rate and market risk exposures, funding and market liquidity exposures, investment securities portfolios, derivative activities, and counterparty credit risk exposures. Jim holds an MBA, an MA and is a CFA.

Jim will also serve on the chapter’s Advisory Committee.

Pamela Gogol, New Steering Committee Member
Pamela is a Principal Examination Specialist – Market Risk at FHFA. She previously managed liquidity and retirement portfolios for a state agency, consulted for a decade with clients including World Bank, Fannie Mae, Ginnie Mae, Ernst & Young, Zions Bank, Commerce Bank and Tradition Asiel, and earlier was Director of Capital Markets at Federal Home Loan Banks’ Office of Finance (16 yrs). Pamela holds an MBA and is a CTP.

Pamela will also serve as a member of the DC Programs Committee.

Oluwaseyi (Tony) Awoga, New Steering Committee Member
Tony holds a Masters of Accountancy degree from the Bowling Green State University, Ohio USA. Prior to venturing out to work as an independent consultant, he worked in the Internal Audit department of a secondary mortgage company where he evaluated the adequacy and effectiveness of business and accounting controls within the organization. Before joining Fannie Mae, he worked at Deloitte and PriceWaterhouseCoopers and provided auditing and financial consulting services to companies in the manufacturing, financial services, government and not-for-profit industries. He is a Certified Public Accountant (CPA) and a Professional Risk Manager (PRM).

Tony will also serve as the chapter's Treasurer.

Christopher Laursen, Resigning Co-Regional Director
Christopher Laursen has resigned his position of Co-Regional Director of the Washington DC chapter, due to unyielding demands from his current work. He will continue to serve the chapter as a member of the chapter’s Advisory Board. We would like to extend our thanks and gratitude to Chris for his time, energy and commitment to the PRMIA Washington DC chapter since his appointment in March 2010.

Thomas Day, existing Co-RD, and the Washington DC Steering Committee have begun a search for a candidate to fill this Co-Regional Director position.

Christopher Whalen, New Advisory Committee Member
Christopher Whalen has resigned his position on the Steering Committee, and will join the chapter’s Advisory Committee. As the former Regional Director of the Washington DC chapter from 2007 - 2010, Chris has had a tremendous influence on the chapter’s growth and success. We extend our sincere thanks to Chris for all that he has done for the Washington DC chapter and for PRMIA as a Regional Director and as a Steering Committee member. We look forward to his role on the Advisory Committee.

Date: December 1, 2011
Location:

Federal Home Loan Bank of Atlanta
1475 Peachtree St., NE, Atlanta, GA 30309

Registration begins at 8:00 am
Conference ends at 5:00 p.m

Focus Areas:

The Future of ERM
The Latest Risk Management Best Practices
Impact of Basel III, Dodd-Frank
Stress Testing, Capital/Liquidity Modeling
Emerging Risks, Black Swans
Risk Reporting to Corporate Boards

November 7, 2011
L. William Seidman Center
Arlington, VA 22226

Consistently considered one of the most useful and productive conferences addressing global policy issues impacting the financial services sector, the FDIC Corporate University along with the Washington D.C. Chapter of the Professional Risk Managers’ International Association (PRMIA) cordially invite you to our 3rd Annual Policy and Risk Symposium. Registration details can be found below.

NOTE:

* ALL REGISTERED ATTENDEES WILL RECEIVE A FREE COPY OF PROFESSOR JOHNSON'S BOOK, "13 BANKERS - The Wall Street Takeover and The Next Financial Meltdown"

* PRMIA MEMBERS WHO HAVE REGISTERED BEFORE OCT 30 WILL ALSO RECEIVE A FREE COPY OF NICK DUNBAR'S BOOK, "THE DEVIL'S DERIVATIVES"

* REGISTER HERE

Click here for a copy of the agenda, topic and speakers for the day.

Symposium Context:

One of the important lessons learned from the ongoing financial crisis is that our domestic and international financial systems retain a high degree of exposure to systemic risk and lack the resiliency needed to effectively support today’s highly interconnected, global commerce. In times of uncertainty and economic stress, firm-specific and system-wide fragilities continue to expose institutions, and indeed society, to contagion that is difficult to control. We see this today in the concerns over sovereign exposure to EU countries whose debt rating pose concerns relative to the recent downgrade of the U.S. by Standard & Poors (S&P), as well as the stability of monetary systems worldwide - including the Euro. Today, the ability to recover from a shock, much less resolve a large bank failure, remains an untested proposition and one that, regardless of arguments to the contrary, should give us all cause for concern.

Simply put, the growth of commerce and economic activity has outpaced the ability to safely manage enterprise risk at many large, cross-border financial firms. Beyond the banks themselves, cross-border supervisory agencies, communication and information sharing agreements, and crisis management groups have not kept pace with the complexity of markets, organizational intricacies, market growth, and product exposures. Although much of today’s regulation and policy is focused on improving systemic risk management standards of practice, regulate products, and enhance internal risk-governance regimes, this has been a slow-moving and globally inconsistent process. Regulators and central authorities have consistently been caught off-guard during the crisis.

It often seems no one has stepped back to ask the fundamental question:

Are we working with an inherently unstable system prone to shocks and destabilizing events and, if so, what policy options must be considered that are currently “off the table”?

This Symposium seeks to bring fresh ideas and possible solutions to the on-going financial crisis. We will deal with major areas of stress and potential for contagion and policy error including:

Housing: Risk retention, qualified residential mortgages, the implementation of policy rules (i.e., DFA), and alternative options
Derivatives: Over-the-Counter (OTC) Derivatives, U.S. loan guarantees as OTC credit default swaps, and Title VII of the DFA
Financial System Health: The banking business model and its inherent fragilities.
Monetary Policy: How quantitative easing relates to a solvency crisis, and the pros and cons of what has been a "traditional" approach to a "non-traditional" crisis. Discussion of QE-"n".
Capital Standards: Basel capital rules and the risk of multilateral, cross-border "fixed regime" policy standards.

KEYNOTE SPEAKER: Professor Simon Johnson

We are pleased to have as our honored speaker Professor Johnson. Professor Johnson is the Ronald A. Kurtz (1954) Professor of Entreprenuership at MIT Sloan School of Management. He is also a senior fellow at the Peterson Institute for International Economics in Washington, D.C., a co-founder of BaselineScenario.com (a much cited website on the global economy), a member of the Congressional Budget Office's Panel of Economic Advisers, and a member of the FDIC’s Systemic Resolution Advisory Committee. A regular columnist to numerous publications and author of 13-Bankers: The Wall Street Takeover and The Next Financial Meltdown, Professor Johnson continues to be one of the most celebrated and important thinkers as we continue our experience with the on-going financial crisis.

Who Should Attend?
Senior financial institution managers and regulators as well as others engaged in the areas of financial market policy, supervision, risk management, accounting, and advisory services. The topics assume a senior level of experience and looks to create an open dialogue between practitioners, academics, thought-leaders and policy-makers.

Logistical Details:
Where: FDIC Seidman Center, http://bit.ly/Seidman_Center, Building C (ID is required at security and registration confirmation at sign-in)

When: Monday, November 7, 2011

Time: Breakfast at 7:30am
Event starts at 8:15am
Reception at 6:00pm

Registration: PRMIA members can register on our website. It is Free for all Sustaining Members. Non-Sustaining Members and Students who are non-members may attend at a reduced rate of $25. If you are not yet a PRMIA member, please consider joining. We have many levels of membership available including free memberships. Please click here to join PRMIA.

Non-PRMIA members can register by contacting support@prmia.org or call 612.605.5370 with your name, title, company, phone number and email address. If you are a non-member, a reduced $25 fee will be required by paying with a credit card. CFA Washington members may attend at a reduced rate of $0. Please suppy your CFA number during registration.

Regulators will register by emailing Margretta Garnett at ccbconf@fdic.gov. All Regulators may attend free of charge thanks to the generosity of the FDIC.

Fees: PRMIA Sustaining Members: $0
Non-Members or Free PRMIA Members: $25

Students: $25
CFA Washington Members; $0
Financial Regulators - FREE

Registration:

Registration is required for this event!

You are encouraged to sign-up as soon as possible as space is limited. Historically, all of our events have been over-capacity so please register as soon as practical.

FDIC employees must register by contacting Margretta Garnett at ccbconf@fdic.gov


Presenters

Simon Johnson (KEYNOTE), Professor, MIT

Anne C. Canfield, Executive Director, Consumer Mortgage Coalition

Kathy Dick, Managing Director, Promontory

Nick Dunbar, Author of The Devil's Derivatives, Journalist, Bloomberg

Sean Egan, President, Egan-Jones

Jesse Eisinger, Pulitzer Prize Winner, ProPublica

Anthony Hughes, Senior Director, Moody's Analytics

Arnold Kling, Founder & Co-Editor, Econlog

Christopher Laursen, VP, NERA

Steven Lee, Managing Director, Global Client Consulting

Keith Ligon, Chief, Americas Section, International Coordination Group, Office of Complex Financial Institutions at FDIC, FDIC

Steve Lindo, Director, Fifth Third Bancorp

The Honorable Allan Mendelowitz, Former Chairman, FHFB, Founding member of the CE-NIF

Karen Petrou, Managing Director, Federal Financial Analytics

Alex Pollock, Resident Fellow, AEI

Barbara Rehm, Editor at Large, American Banker

PRMIA-DC will review the candidates in the next week, and announce the new co-Regional Director in the Third Annual Policy and Risk Symposium on Nov. 7, 2011.

The search gives preference to internal candidates, people from PRMIA community, and also welcomes external candidates. PRMIA-DC accepts nominations and applications.

The CO-Regional Director is responsible for, among other things, the PRMIA-DC Chapter's development strategy, events, communications, and educations. PRMIA-DC has over 5000 members globally, around 400 of them living in DC/MD/VA area.

Chris Laursen has served as the co-Regional Director since 2010, and contributed to PRMIA-DC's great success in 2010 and 2011. Given the un-yielding demands of his current employment, especially the inflexible schedule, he is resigning as Co-Regional Director. Chris Laursen will still be with us in the Advisory Board for DC Chapter.

Candidates can use the following application form to submit their applications to dc@prmia.org

For any questions about the CO-Regional Director role, please send email to dc@prmia.org.

As expected, much of the government, central bank and regulatory interventions since the subprime and financial crisis of 2008 have produced no lasting results in terms of sustainable growth and jobs. If anything, these have tended to dislocate markets, creating uneven effects against what is supposed to be market-driven reallocation of resources.

I can go on, but the picture is clear. We are living in an era of unprecedented uncertainty. Uncertainty that is exacerbated by political infightings, unpredictable government and central bank policy actions. These include possible interventions and policy actions touted as remedies for fighting all sorts of existing and coming economic ills - unemployment, depression, inflation, excessive debt, potential defaults, bail-outs of banks, companies, states, countries. The list is frighteningly long. When mixed with nervous market reactions, you can imagine the flux and swing these could bring. The volatility is already unsettling with reactions from the heavy actions already taken. Much more unsettling is the fear of what other actions might be taken, especially with many countries all hitting different or even the same buttons in quick successions. Mind-reading and outright guess-work is the order of the day. Recent volatilities in the markets are a good indicator and barometer of the level of uncertainty and fear felt out there.

Having crafted some of the most comprehensive regulations, many are still concerned that we might be barking up the wrong tree. In this issue, we present one such viewpoint that challenge the premise underlying the Dodd-Frank Act.

For those who feel we are on the right track, there is concern about implementation and the flood of rules that could smolder whatever is left of life in the economy and businesses. For businesses, risk management has become more unwieldy by the day. Boards and business management now have to grapple with not just traditional business risks, but also external actions that trigger macro-risks that could dramatically shift the ground in the blinking of an eye. We will have to cover this whole new area of managing macro-risks in another issue.

What we want to bring to you in this issue are some of the rumblings on the role of ratings agencies, and the troubles that are shaking the whole world - the EU debt crisis. We added a new section - RiskPerspectives. In this issue, we have an article examining the role of inflation as a remedy to our current ills. We have also featured an article on the effectiveness of the PCA (Prompt Corrective Actions) framework on the prudential supervision of banks here in the US. Given the quickly shifting ground, we also asked the question in our RiskCareers column- what's the future for the financial services industry and careers in risk management for this industry?

To help us stay abreast of developments in the regulatory front, we continue to highlight some recent proposed and finalized rules in our RiskRegulations. In our RiskResources section, we highlight links interesting and useful materials on Stress Testing.

We are ever thankful to all our contributors for sharing their thoughts through this newsletter. We encourage all members to continue to engage actively through various PRMIA and DC Chapter events. As usual, do send us your suggestions on how we can further improve.

Steven Lee, Global Client Consulting
Editor, RiskJournal
Deputy Regional Director, PRMIA DC

Welcome to the second issue of PRMIA DC's newsletter. We were moved to initiate this communication because of the increasing prominence of Washington, DC in the risk realm. We believed that our Chapter is best positioned to follow the significant developments on the Hill and the various government agencies that are involved in risk. The overwhelming and positive response to our first issue suggests that we were correct. We will continue to position PRMIA DC to lead and support our members in this important area.

As we move through the summer of 2011, the effects of the global financial crisis are still being felt. Uncertainties and doubts about whether the Herculean bail-out efforts here in the US and across the globe have helped continue to linger.

As we witness recent events: the deepening global debt crisis, starting with the near default of several European sovereigns, the fallout from the catastrophic earthquake in Japan, the increasing current of fear from the extremely loose and seemingly ineffective monetary policies by major governments especially in the US, one wonders if the stage is set for events to now quickly unravel.

In this issue, we have included some short articles on managing risks, including thoughts on market transparency, incorporating country risk assessments, understanding the shaping of the "Volcker Rule", and the future of risk management. We have added some Chapter event updates that we hope members will find useful.

RiskJournal is intended as another resource that our members will find useful. We have sections on: