Welcome to the award-winning FCPA Compliance Report, the most senior podcast in compliance. In this episode, I begin a 2-part series on the subjects of FTX and risk. I am joined by Gilbert Paiz and Andrew Gay, principals in the Texas Hill Country Advisors. In Part 1, we consider risk and risk management through the lens of US domiciled financial institutions and how their risk management protocols help to not only assess risk, but manage risk throughout the life cycle of a banking customer relationship. In Part 2, we will consider individual risk in investing and what type of background information, questions and due diligence individuals should engage in and how these questions and background investigations apply equally to larger investments made by sophisticated investors, hedge funds and institutional investors; who should have made them before investing in FTX but they all failed to do so.
Some of the highlights include:
· How do banks think of risk?
· What internal processes or controls are in place to help a bank manage its risks?
· What types of oversight do banks and financial institutions use to help manage risk?
· Why are levels of review so critical?
· How do banks think about customers in terms of risk?
· Who decides how much risk to allow a customer to engage in with a banks money, whether through loans or other capital?
· Do bank employees receive ongoing training on risk management issues?
· What tech is in place to facilitate the management of risk?
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