Explore
Close
Your acceptance of all cookies will permit robust site functionality. If you don't allow cookies, some features and functionality of OCC's site may not operate as expected. If you do not choose either cookie setting for our site, or if you close this window, this message will continue to display on each page you visit. Cookie settings can be controlled in your Internet browser to automatically reject some forms of cookies. For more details on cookies this site uses, see our OCC Site Cookies page. In addition to using cookies, we retain other information, including your Internet Protocol (IP) address, for the purposes listed in the Privacy Policy.

OCC Chairman Discusses Risk Appetite Framework

August 01, 2014
OCC News -

Craig Donohue

OCC's Board of Directors recently approved the adoption of OCC's Risk Appetite Framework. Executive Chairman Craig S. Donohue shares insights on the framework's design that ensures material risks impacting OCC are monitored, identified, analyzed and addressed in a timely and effective manner.

What is OCC's Risk Appetite Framework?

Our Risk Appetite Framework, or RAF, is a tool that helps OCC achieve its risk management goals by communicating acceptable risk levels to employees and the Board. It allows OCC to articulate the level and types of risk that it is willing to assume to achieve the company's strategic objectives. The RAF includes risk statements, risk metrics and an outline of the roles and responsibilities of those overseeing the implementation and monitoring of the risk at OCC.

How does this RAF help OCC in its critical role of promoting financial stability in the marketplace?

The RAF is designed to ensure that OCC monitors and takes action on situations in which limits set within the Board-approved risk appetite are breached. It is also expected of systemically important institutions like OCC because it is an excellent tool to help OCC identify acceptable limits in relation to taking and measuring risk. Having a clear understanding of the risk limits sets the tone for risk culture across the organization and helps ensure that business decisions are made within the limits set by the RAF.

What does the RAF look at, and what are the risk categories?

OCC's Enterprise Risk Management team developed a risk universe to ensure that all material areas of risk are monitored by the RAF. There are six risk categories in this OCC risk universe: Financial, Operational, Technology, Legal/Regulatory, Strategic and Reputational. Each category has its own monitoring metrics and tolerances to ensure all of our business lines are within the limits of our risk appetite.

What is the reporting structure for identifying and reporting risks?

OCC monitors adherence to the RAF thresholds through the use of a detailed dashboard, follow-up analysis and other resources. Reports track performance relative to the metrics, highlight emerging risks within the overall market and business environment, and flag key issues detected. These metrics are used by the Enterprise Risk Management team, senior management, and the Board to monitor OCC's risk exposure.

This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as an endorsement, recommendation or solicitation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of the disclosure document, Characteristics and Risks of Standardized Options. Individuals should not enter into option transactions until they have read and understood this document. To obtain copies, contact your broker, any exchange on which options are traded, or The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 ([email protected]).