Financial Services

The financial services domain includes three important processes of Governance, Risk Management, and Compliance. These services are offered to the various constituents of the financial markets.
Financial markets can be divided into different sub-types:

• Capital markets, which consist of stock markets (which provide financing through the issuance of shares or common stock and enable the subsequent trading thereof) and bond markets(which provide financing through the issuance of bonds and enable the subsequent trading thereof)
• Commodity markets, which facilitate the trading of commodities
• Money markets, which provide short term debt financing and investment
• Derivatives markets (including futures markets), which provide instruments for the management of financial risk
• Insurance markets, which facilitate the redistribution of various risks
• Foreign exchange markets, which facilitate the trading of foreign exchange

Governance, Risk Management, and Compliance are highly related but distinct activities that solve different problems for different sets of constituents of an organization.

For the smooth and efficient management of any organization, it is very crucial to ensure that they go hand in hand. It is very important to realize that if the first (governance) is not in place, the second two (risk management and compliance) become irrelevant and probably cannot be meaningfully achieved.

Governance is the responsibility of senior executive management and focuses on creating organizational transparency by defining the mechanisms an organization uses to ensure that its constituents follow established processes and policies. A proper governance strategy implements systems to monitor and record current business activity, takes steps to ensure compliance with agreed policies, and provides for corrective action in cases where the rules have been ignored or misconstrued.

Risk Management is the process by which an organization sets the risk tolerance, identifies potential risks, and prioritizes the tolerance for risk, based on the organization’s business objectives. Risk Management leverages internal controls to manage and mitigate risk throughout the organization.

Compliance is the process that records and monitors the controls, be they physical, logical, or organizational, needed to enable compliance with legislative or industry mandates as well as internal policies.