Joseph Iraci Q&A

Joseph Iraci Q&A

Joseph Iraci, Head of Financial Risk Management at TD Ameritrade and CRO TD Ameritrade Futures and FX

The Evolving Landscape of Conduct Risk

What keeps you awake at night?

The speed in which changes are occurring.  It seems like change is happening at a faster clip than ever before, probably as a result of technology advances and the dissemination of more news.  We essentially have a 24-hours news cycle now that when combined with technology advances it has the ability to drive continual change.

How have things changed within the organizational dynamic in terms of risk priorities over the past 5 years? And, looking forward, where do you see the future of risk and operational risk priorities?

Historically risk seemed more of a defensive player.  Volatility existed and risk management developed in order to mitigate the effect of volatility.  In today's world changes are happening faster and risk now is being looked at as a strategic player that can be used to assess risk, choose a path forward - risk becomes a tool to help gain competitive advantage.  This change will also impact things like who we hire and how do we develop talent.  Going forward operational risk can especially help toward developing scenario analysis that takes in account both quantitative and qualitative information to provide a more holistic look.

What do you feel is the greatest challenge for organisations developing a conduct risk framework and why?

Conduct like reputation are somewhat difficult to measure so that in itself is a challenge.  Another challenge is that our current tool set (KRIs, loss events, RCSAs) is not equipping us to understand culture and conduct, so bridging that tool set gap is a challenge.

How does culture feed into this?

Culture is at the heart of everything, whether good or bad.  Culture drives conduct, conduct drives behaviors, and behaviors determine outcomes.  Firms have got to get culture correct because it drives everything else.

What role does the risk/ operational risk department play within this context?

Risk management is in a perfect position to drive culture because it is one of the only disciplines that has a horizontal view of the company that provides detailed information.  Most organizations are vertical based on a hierarchy, but risk management horizontal thus can provide meaningful information to drive decision making.

If you were to offer three key takeaways for readers what would they be?

1. Risk managers of the future will be more strategic looking than the past.

2. Changes are occurring more rapidly so recruit for the skills needed to manage risk going forward not backward.

3. Change provides both upside and downside, risk managers should always have a balanced perspective