Sunday, April 29, 2012

Risk Management: The Three Lines Of Defence

The three lines of defence principle is a long and well established concept that has been deployed in a variety of industries and situations.
In the insurance industry the three lines have consisted of the following:
The business the day-day running of the operation and the front-office
Risk and compliance the continual monitoring of the business
Audit the periodic checking of risk and compliance.

In part this approach is the solid foundation upon which firms can protect themselves against a range of potential risks, both internal and external, and to a degree it is an approach that is forced upon them through regulators' insistence on external audits as well as on an embedded risk management capability.

As reliable and well proven as the three lines of defence concept is throughout the insurance industry, it is in need of an update. In today's market there is a far greater number of risks and regulations and an ever-increasing level of complexity in business. Simply being sure that every major risk is in hand is a difficult task.

It is not so much the concept of the three lines of defence that needs to be overhauled but the way that these three lines communicate with each other and the relationship between them.

The complexity of today's market affects the risk and compliance function more than any other. In the majority of organisations management of the various different forms of risk operational risk, compliance risk, legal risk, IT risk are all carried out by different teams, creating a pattern of risk silos. This situation leads to a number of negative consequences. The first of these concerns efficiency.

These risk silos each gather their information by asking the business to provide various information relating to their daily tasks and any potential risks associated with them. Because of the silo structure, the business will find itself being asked for this same information on a multiple of occasions. This not only leads to inefficiency due to the duplication of effort, it can also lead to frustration from front office staff and subsequent disinclination to engage with risk management.

Such is this level of frustration that, according to one insurer which recently appointed a new chief executive, when the new head asked his staff what single change would make their life easier he was told to do something about the endless questionnaires and check sheets that they have to fill out to satisfy risk managers and compliance officers.

While frustration among staff is never a positive development, any company's risk management programme depends on getting buy-in from the staff so anything that threatens the success of this programme has to be addressed.

Perhaps more importantly there is also an inconsistency due to the different ways this same information will be interpreted by different risk teams. This disparate relationship between risk teams can also lead to a lack of recognition over potential correlations between various risks. For example, the recent sub-prime crisis that has affected so many banks may have been avoided if there had been more co-ordination and communication between the credit department and those selling mortgages to people with bad credit.
Similarly the 6.4 billion loss at Socit Gnrale was the result of several risk oversights, combining a lack of controls on individual traders as well as a failure to implement various checks on the trading systems themselves. There was also a negligence of market risk factors with risk management not highlighting a number of transactions having no clear purpose or economic value.

Major risk events rarely result from one risk and most commonly involve a number of potential exposures all combining. Consequently insurers need to be more joined up in their risk management and more consistent in the way that risk is reported across the organisation.

For those individuals charged with the responsibility for enterprise-wide risk management, their task is made harder by the inconsistent formats that they receive their risk information. For example, interest rate risk may be reported as a single Value at Risk number, whereas regulatory compliance or operational risk may be expressed through a traffic light format. How is a chief risk officer, or indeed a CEO, expected to rank such disparately expressed exposures?

What organisations are now looking to do is to gather all of the various risk information in a consistent format for their chief risk officers to work from. So having a common framework for this process is crucial.
There are various initiatives in the insurance industry ICAS, Solvency II and, often, the Basel Accord all of which have contributed to the growth of risk and compliance teams. The chief requirement for all of these regulations is capital adequacy, meaning that insurers have to set aside a calculated reserve of capital to cover a number of potential risk scenarios.

However, regulators will say that they are not simply looking for firms to fulfil their most basic regulatory requirement and to set aside a defined sum of money to cover a list of risk scenarios. Instead they are looking for firms to concentrate on the methodology used to arrive at these numbers, and on ensuring that the risk management process is thoroughly embedded throughout the organisation and scenario analyses bring together risk information from all of the various risk silos.

Scenario analysis is one approach that firms are using to meet their regulatory requirements but effective scenario analysis is very much based on the ability to collate and correlate risk information from all over the organisation.

For the internal audit teams, their primary concern is to be more effective and to ensure that they are not simply repeating the work of the risk and compliance teams and are adding value by rigorously testing this work. Such a task requires access to this information and, ideally, to be using the same common framework as the risk and compliance teams so that information can be seen in the correct context.

We are seeing much greater independence and objectivity in the internal audit role, says Simon Rogerson, head of internal audit at Zurich Financial. In an increasing number of organisations the internal audit function is no longer confined to existing within a corner the finance department and has more direct communication with senior management.

The Role of Technology:
According to Rogerson, the use of technology to facilitate the evolution of the three lines of defence is a new development in the insurance industry. Because it has been hard to clarify the different lines of defence and their relationships, it has been difficult to build a business case for a new system and to build the necessary workflow around these different roles.
The situation is exacerbated by the presence of separate legacy systems in the business, risk and audit departments. Everyone is aware of the weaknesses in their own systems but this knowledge does not always translate across the three lines of defence. This leaves most insurers with two choices. The first is to go back to the start and design a new all-encompassing system from scratch. The second choice is a system that supports common processes and reporting while allowing each function to continue using specialist solutions that suit their own needs.

I think the successful firms will be those that recognise there are different functionalities in these different spaces but they are all able to communicate with each other in a common language and through common systems, says Rogerson. Observations can be shared and specific risk issues can then be discussed through an email exchange and summary reports can be automatically sent out to managers.

For internal auditors a lot of their work is manually-based, says Rogerson. But technology would enable us to do these things quicker and more accurately. The system would also enable us to make certain risk issues generic so that where a risk is identified in one office or department we can then alert all the relevant risk managers in other departments and offices to see if this risk has been recognised and if there are processes in place to manage this risk. By automating this identification of risk, it enables insurers to take a smarter, more efficient and more global approach to the internal audit function.

For risk managers it is about simplifying the process. They have a limited set of resources and want to make as much use of them as possible. In order to achieve this, it often means involving the business in carrying out much of the risk process controlled risk assessments through recording any losses or the breaches where these losses occur. By conscripting the services of their business colleagues, risk managers are able to concentrate on the value-added side of their work and their role.

There are also some wider benefits to the organisation from such a system and the principle behind it. The more that front-office staff is exposed to the mechanics of the risk management process, rather than being repeatedly petitioned for the same information from multiple parties, the more they are aware of its importance and their role in it.

Decades ago, total quality management was a fashionable concept in many organisations. The frailty of this concept was that in having a dedicated management team in this area, the rest of the business could assume that quality was no longer their problem but someone else's. This same misconception could be applied to risk and compliance, unless the business is kept well-informed of the risk management process and their own role within this process. Therefore it is important to make everyone realise that risk is their problem too.

Friday, April 27, 2012

Getting $5,000 Personal Loans With Bad Credit: How To Get Approval Fast

Applying for a loan can be a nerve-wracking experience, especially when confidence in getting approved is low and the need for the funds are high. Trying to get the green light on a ,000 personal loan with bad credit is even more of an ordeal.

The good news is that approvals rest on more than simply the credit history of the applicant. From the basic criteria to proof that the repayments can be handled, a lender needs to be convinced by several aspects, so getting loan approval fast is possible even if the credit score is poor.

Still, it is a good idea to strategize before applying for a personal loan of any size. This is because the choice of lender can have an impact on the terms of the loan. Even if the loan is for a modest sum, like ,000, applicants must be willing to make some compromises.

Influence of the Credit Score

So, what is the significance of a credit score when applying for a ,000 personal loan with bad credit? Well, credit histories have a minor role in the approval process but they are never behind the final decision. However, they do have a direct influence over the interest rate to be charged, and therefore the affordability of a loan.

Generally, an excellent score (like 700) means a relatively low interest rate will be charged, whereas a lower score (620) prompts a higher interest rate. However, the lower the score the higher the interest rate so getting loan approval fast is unlikely when the scores are low.

When it comes to larger sums, the difference in interest can be significant. A ,000 loan could cost as much as 0 in monthly repayments over 60 months, and a lower rate might see it reduced by or . Savings can also be made on smaller personal loans.

Consider the Loan Term

Another factor that can be significant in securing approval is the term of loan. Basically, the longer the term the more affordable the loan is. This is certainly true for large loans, but the term is also important for a ,000 personal loan with bad credit when budgets are tight.

The term of a loan means the number of ways the loan principal is divided up. For example, a ,000 loan over a 2-year term means ,000 is divided by 24 (2x12 months), while over 5 years, the principal sum is divided by 60. Getting loan approval fast is easier when the term is longer because the monthly repayments are less.

The difference can be quite big. A ,000 personal loan repaid over 24 months will cost 5 monthly, but over 60 months will cost less than 0 - making it much more affordable.

The Influence of the Right Lender

The lender has a major influence when it comes to getting a ,000 personal loan with bad credit. It is tempting to go straight to a traditional lender, but their terms are usually very strict, with high interest rates, low loan limits and high late fees charged. Online lenders are known to offer terms that are more suitable to applicants with low credit scores.

And since many carry out no credit checks on loans of less than ,000, getting loan approval fast is no major problem. Of course, other factors, like proof of income, are necessary, but the loans are designed for those who are unlikely to be approved by banks and credit unions. So, getting a ,000 personal loan is fairly straightforward.

No Credit Check Personal Loans-promise instant availability of cash at no risk

The demand for cash is always there in life. Life just cannot go without countering expenses on routine or sudden basis. Routine expenses are for groceries, infrastructural facilities like electricity, water and gas, house hold rent, etc. However, it is too hard to manage these expenses with singular earning of 1000. One emergency bill like untimely medical aid or car repairs or unplanned trip may cost more than your salary. Never shy away from applying for short term loans even with bad credit history. No credit check personal loans would help you to fill up the financial gap and improve the credit scores. No one can stop you from applying for these loans even with any bad factor like county court judgments, foreclosures, bankruptcy, missed payments, etc.

It would be better to gain more information on these loans. The websites are available to assist you to collect more information on no credit check personal loans. These websites represent different loan facilitators. It is already known that rates are always higher for unsecured loans. Many loan facilitators would claim to offer you at reasonable rates. It is also required to remind you of the fact that the word "unsecured "stands for no collateral against the loan amount. The terms and conditions may vary from one lender to another. It is advisable not to take any hasty decision for signing up with any particular financer. Read the terms and conditions carefully. Use your logical skills to find out if there is any hidden cost or not. Careful approach would assist you to stay away from extra liabilities. The loan amount would range between 100 and 1500. The repayment period would vary from 14 to 31 days. It may be extended as per your convenience.

As these loans are applicable for your urgent or uncertain needs, these loans are also known as urgent payday loans. It would be a financial support for you till the time you access the next pay check. You would have to fulfill the basic conditions while filling up the online application form. Such conditions are highlighted as follows:

a) Must be citizen of UK.
b) Should have a regular source of income.
c) It is relevant to mention the bank account details which should not be less than 3 months old.

Submit the filled up online form to the respective lender. In fact, it would reach the secured server of the lender. The loan amount would be deposited in to your bank account. Then you would be able to utilize the loan amount within few hours.

Thursday, April 26, 2012

SMSF Investment Strategy Template: Making Sure That You Are On The Right Track

Generally, the primary reason for an SMSF is going to be sure that there will be a stable and also sufficient income for you and your loved ones to relish once you retire. To get this, one have to think about methods on how to invest their hard earned money to ensure it earn and grow. Getting ready for your retirement years requires you to definitely get one of these extremely efficient and sophisticated scheme just like the SMSF investment strategy template to ensure that you are well on the correct track.

The SMSF investment strategy template is an efficient application that's good at assisting you begin. There are numerous investment strategy books written by highly trained professionals who are experts in SMSF management.

The SMSF investment strategy template covers an array of asset lessons, and also investment choices including various financial products, offsetting financial resources, real estate properties, precious metals among others as well as the traditional things like allotted shares and flat interest. Remember although, that it is only a sample record and that you are accountable to plan and apply your own personal investment approach.

Another thing that you must bear in mind when planning new investment approaches for your own SMSF is to check that your trust deed lets it. Since the SMSF is meant to give a steady flow of earnings for people once they retire, a great investment technique is essential to guarantee them of the retirement life that's enjoyable. Knowing all of the aspects, the regulations and rules as well as the kinds of investments permits you to select the best direction to take. Remember that, unsafe investments can have a bad effect on your retirement funds.

SMSF administrators promote investment strategies that are made to guide and help members and those who would want to start saving up and make valuable investments to determine which to do very best with their money. Finance experts suggest several SMSF owners to divide their funds and have numerous investments instead of placing all their money in one type of investment only.

Multiple investments will ensure that you will have a back-up fund if something goes completely wrong with one of your investment or business. If you choose and decide to invest a big amount of your hard earned money into a single stock or property, you will then be giving yourself a big danger. It's always best to understand various SMSF strategies prior to making any kind of decision. Find all of the valuable and important important information through the help of an SMSF investment strategy template.

It is essential for you to understand right from the beginning just what your hopes and dreams are and your expectations from your investments. Do not forget that there are actually pitfalls involved in any type of investments, this means you need to be ready. Prior to let go of your money, have a very well planned SMSF investment strategy template to assist you. It pays to think about hiring a financial specialist if you are still unsure of how to begin.

Wednesday, April 25, 2012

5 Steps To Getting A Ppi Refund

The basic steps to getting PPI refunds are going over the details of your loan or loans yourself, contacting the lender about your loan and looking at your credit report, talking to your lender about a PPI refund, talking to an ombudsman about a PPI refund and waiting to hear back from the ombudsman. You can call an ombudsman about what to do. Generally what you would do is contact the bank first and the financial ombudsman after. Contact the specific branch relevant to your policy of the bank in question. Going after a PPI refund is often worth a shot even if the loan was only a verbal agreement, not a written one, though the process tends to be easier with written agreements.

Try an Ombudsman

The services of an ombudsman are free concerning this matter. You can try reclaiming your PPI even if you are not sure whether you were sold one or not. A claim can also be made if your debt has been passed to a collection agency. Reclaiming PPI on an old account is possible, though it is easiest if it was active in the past 6 years. PPI refunds regarding loans older than this can still happen. Reclaiming PPI also will not affect your credit rating, by the way, and you can make claims concerning multiple PPI policies for different loans at the same time, whether these loans were at the same bank or not. Each claim does require separate paperwork, however.

PPI Details

You can also reclaim PPI after you have reclaimed bank charges. Reclaiming can still happen on a loan that you have paid off, and it can also still happen if you are no longer a customer of the bank in question. A debt management plan or even a bankruptcy are not relevant to your ability to make a PPI claim. A bank will often automatically use reclaimed PPI money towards paying off your outstanding debt with that institution if you have any, but you may be able to reverse this if you are in a position of financial hardship and need the money for something else. However, concerning bankruptcy, your official receiver will likely get your PPI refund.

More on PPI Matters

PPI refunds can still occur if your old lender has been taken over in the meantime by another institution, and you may also be able to do so if your old lender no longer exists. PPI monies that are now part of an estate can often also be reclaimed. PPI matters can be a grey area when it comes to divorces, however, though it is still probably worth looking into. You can also reclaim if you now live abroad. Reclaimed PPI monies can number in the thousands of pounds. PPI claims are most often related to bank policies, but there are also catalogue, car loan, credit card and store card policies, but not often mortgage policies. Many different financial products can be associated with PPI policies.

Debt Management Companies are lifeline for debtors

Debt Management Companies are the best media to solve many of the problems regarding to debts. The cases of debt oriented problems and also the amounts of losses to the creditors by bankruptcies are increasing at rapid rates. The Debt Management Companies are the best middle men between these debtors and creditors and also are the best performers that guide the people to come out of debts. There are many of the functions offered by these Debt Management Companies. Here we have disclosed some of the facts and details of these companies.

* Debt Management Companies

Debt Management Companies are the companies that make the unsecured debts of the people reduced and get them settled to certain amount by negotiating with the creditors. There are many of the ways to make this happen and all the companies are having different ways and approaches to cater the debtors who feel it impossible to repay to the creditors. The importance of these companies is gaining largely as the number of debtors and defaulters are increasing at unbelievable speeds. The Recession and Slow down of the economy has ruined the personal finance of millions of people. There are many of such companies hiring the experts and best consultants having vast knowledge and information about debt management and even the practical approach to handle the debt. These experts and consultants council the debtors, understand their problems and offer them the best possible plan that can make their financial lives stress free and sound.

* The working of Debt Management Companies

The Debt Management Companies are the bodies that are having higher sources and connections with the Creditors and giant organizations. Even the experts who are representing these companies are aware of latest amendments and legal rules or regulations regarding to debtors and creditors. These changes can make them aware to fight or to negotiate. The experts of the companies' first council the debtors who have become client of them and derives to the calculations that make both the parties satisfied. After deriving to this formula, the company approved it firstly with the debtors and then they represent the formula to the creditors with the help of third party. Thus, the Debt Management Company works as "Admin".

* The charges of Debt Management Companies

The charges or fees of Debt Management Companies vary person to person. The general theme of charging is to charge the debtors according to the money saved by the company on the monthly installment payments. Also these companies receive more of the percentage from the creditors if these companies convince the debtors to pay the surplus amount of money from the amount decided by the debtors initially. Thus, the experts inspire the debtors to earn more and to pay more to the creditors in order to receive more of the fees and charges from the creditors as well. In turn, these companies offer many of the guidance and practical steps that can boost the conditions of the debtors. There are many of the experts who offer better solutions and help to the clients.

* The advantages of Debt Management Companies

There are many of the advantages of these companies that are making the debtors enriched and satisfied with the lives and also pulling them out of the ways of depression and stress.

* Advantages of Debt Management Company


* The Debt Management Companies save the economy from many of the new bankrupt cases by guiding the debtor the ways of debt management and also making them aware of new income sources and better ways of negotiating with the debts and creditors.

* The Debt Management Companies are the reliable source of executing the Debt Management Plan that is the lifeline for the debtors who feel it impossible to pay the liabilities further. These debtors are also offered better services and personal counseling by the financial experts and debt counselors. The debtors can definitely get relieved with the help of these companies and their functions.

* The debtors can derive to the calculation of monthly payments of installments as the experts are having all the knowledge and formula to consider the monthly income of the debtors and capacity of paying to the creditors after deducting the unavoidable expenses. The debtors also are advised about the extravagant expenses and are offered better solutions to resolve the issues. There are many of the cases in which the guidance of these Debt Management Companies has changed the entire lives of debtors. So, these are the advantages that are making the Debt Management Companies lifeline of the debtors and even of the economy at large.

Sunday, April 22, 2012

Five Tips To Become A Better Manager

All managers are not born leaders and all leaders do not make good managers. Good management is attained by having certain set of attributes that sets one apart from the other workers in an organization. Managers play a crucial role in the success of any company and, therefore, they need to excel at their job if they want to be indispensable in the company they are working. Poor management could lead to a downfall of even the large organizations and will make the job of a manager more risky. It is, therefore, very important to develop the right managerial skills to lead an organization to success.

The following tips and strategies can be used effectively to enhance the managerial skills and become a valuable employee:

Tip #1: Have adequate knowledge and skills
A manager needs to have thorough knowledge of the industry, the company and its operations. Information regarding the job, company's products as well as the financials is also important even if you are not the finance manager. The strengths and weaknesses must be analyzed regularly in order to be a better decision-maker for the organization.

Tip #2: Define responsibilities and expectations
In order to have smooth running of the company, the manager should be clear about the responsibilities and what is expected from the subordinates. The employees should also be aware of what rewards or consequences they might face.

Tip #3: Hire the best human resource for your company
Look for the best professionals in the industry and offer them good rewards once their value has been established. Find out ways to motivate the employees in order to make them more productive.

Tip #4: Be visible
The employees should be assured that the manager is easily approachable and available whenever needed. You need to become a role model for your subordinates and have a proactive approach. There should be no communication barriers and you should be there to listen to all issues faced by your employees.

Tip #5: Maintain a positive attitude
A shaky manager will have shaky employees. Even in critical circumstances, maintaining a positive attitude is very important and crucial to the achievements.

To become a good manager, there are certain personality traits that are essential. Honesty, integrity and trustworthiness are very important characteristics required to become a better manager. Possessing these qualities is imperative if you want to have a successful career.

Saturday, April 21, 2012

Shareholder Loans - treatment by Canada Revenue Agency

Shareholder Loans

It has been widely common for the business owners to use their sole manager/director status to simply take funds for living from the corporation. Or, make the corporation pay for their personal expenses like home renovation or visa bills. Not wishing to declare it as personal income, but rather say that it was a loan that will be paid back later. On the other hand, the employed person would have paid those same expenses from his/her personal salary. It is obvious that the difference between those two would be that the employee has paid personal taxes, pension and employment insurance contribution, before receiving his/her net pay. Therefore, on average, 100k annual salary will give you a 60k net pay. The business owner, taking money directly from the business bypasses the source deductions, and receives access to the whole 100k. By The CRA rules, simplistically stated, If the company earns 250k net, and then pays the salary 100k, has 150k net income and needs to pay tax on 150k (16.5% for small business in Ontario). Then the person receiving 100k salary needs to pay personal income tax.(40-45% or more), and that is precisely what the average business owner is reluctant to do. For the same reason the CRA has concentrated its attention and developed a sophisticated set of laws and regulations to help enforce tax law in that area.

In particular, Section 15 of the Income Tax Act (ITA) outlines the CRA's position on loans advanced to shareholders/directors. The idea is that any benefit provided by the company to the shareholder/director shall be included in his/her taxable income. S. 15(2) deals with "shareholder debt" saying that where the shareholder, or any person connected to the shareholder received a loan "amount of loan or indebtedness is included in computing the income for the year of a person";

There is, however, a gesture of goodwill on the part of the ministry, saying in 15(2.6), that the above does not apply when "loan or indebtedness repaid within one year after the end of the taxation year of the lender" if it can be seen that " the repayment was not a part of series of loans or other transactions and repayments"

Home Purchase Loan

There might have been a home purchase loan from your corporation, that is allowed by the CRA, for the term of 5 years, with the renewal option. Should be" acquired for the sole purpose of acquiring right to inhabit a dwelling where the dwelling is for the habitation of

(a) the individual by virtue of office or employment the loan is received or the debt is incurred

(b) specified shareholder of the corporation by virtue of whose services the loan is received or the debt is incurred, or

(c) a person related to a person described in (a) or (b)"

Saying therefore, that you must be an employee or a shareholder, providing actively services to the corporation.

The loan must bear interest, and its principal does not have to be included in income of an individual, for the amount not exceeding what was actually paid for residence purchase during the year. S. 80.4(1); 80.4(7). The loan must be taken for the term not exceeding 5 years, and the "prescribed" interest rate must be paid.

Automobile purchase loan option is also available, shall it be received for the reason of employment, as opposed to shareholdings.