Transcript Control Framework Breakfast Group Presentation January 2014

Control Framework
A warm Welcome
to
the January
market Breakfast Group
Control Framework
Breakfast Group agenda
9:00
Arrival, breakfast & networking
All
9:15
Welcome
Ali Dove
9:20
ANV – Coverholder business and
Control Framework risks
Ian Mallery
9:35
Phase II update
Jaana Rouvari
9:50
ClusterSeven – meeting
requirements via the best in systems
and spreadsheet management
Ralph Baxter
10:15
Q&A
All
10:30
Close
PROPRIETARY AND CONFIDENTIAL
CONTROL
FRAMEWORK
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Presentation to Lloyd’s – 21st January 2014
July 6, 2015
CONTROL FRAMEWORK
 Acknowledge Key on-going discussion re: audit
scope and coverholder communications and will
work with market to address these issues.
 We had completed extensive work on Phase 1
(Service Companies) of the Control Framework.
 Utilised and adapted as much of this work as
possible in our approach to Phase 2.
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CONTROL FRAMEWORK
 We agreed our starting point is to embed the
Control Framework as business as usual.
 Ownership – Our DUA team are responsible and
accountable for the Control Framework
 Work carried out will be shared with:
o Compliance
o Risk
for review & challenge - adapted accordingly
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CONTROL FRAMEWORK
 New DUA team – changes introduced by the DUA
team in last 12 months validated by internal
audit (KPMG).
 DUA procedures were reviewed to ensure they
compliment the Control Framework. We
anticipate further amendments as we proceed.
 Control Framework approach documented and
reviewed with Lloyd’s - a high level ‘first draft’.
We anticipate this will require further updates.
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CONTROL FRAMEWORK
 Hierarchal Flowcharts produced to see full
process from start to finish.
 Key risks identified throughout the flow charts to
identify where controls needed to mitigate risk.
 Coverholder risk rating matrix produced in line
with Control Framework guidance.
 Remediation Plan to be drawn up to ensure
remaining gaps are managed to completion.
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CONTROL FRAMEWORK
 The on-going market discussion re audit scope
and coverholder communications are essential.
 Our documentation will evolve to reflect changes
the market approve.
 Example High-level Flow Chart
 Questions?
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Control Framework
Control framework Phase II
update by Jaana Rouvari
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Control Framework
Today…
1. Coverholder risk rating exercise
2. Educating auditors
3. Board sign off wording
4. Next steps and new stuff
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Control Framework
Combined risk ratings from the market
29%
48%
23%
What is in the ‘red rated’ section?
• Approx. 1000 coverholders
• Approx. 700 unique
coverholders
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Control Framework
Duplication for Lloyd’s brokers
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B
r
o
k
er
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12
10
8
6
4
2
0
18 14 13 12 11 10 9
7
6
5
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3
2
No. of managing agents
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Control Framework
Duplication for Coverholders
co
ve
rh
ol
de
r
100
90
80
70
60
50
40
30
20
10
0
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8
7
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5
4
3
2
No. of managing agents
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Control Framework
What can we do to manage communications?
1. Quick wins – Get the right people talking
2. Focus on where duplication is highest in the ‘red’ rated section
3. Lloyd’s to engage with those brokers where duplication is highest
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Control Framework
Educating Auditors
Control Framework team working closely with Lloyd’s
Delegated Authorities team on auditor communications.
Objectives are to:
1. Ensure that auditors have sufficient knowledge on the
new scope and why we focus on tax and regulatory
information.
2. Sufficient Lloyd’s licencing structure and skills to
scrutinise risk location with the tools available.
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Control Framework
New version of board sign off letter
Key changes are:
1. Explicit on lead only
2. Risk based approach to coverholders
3. Remove explicit reference to 'Appendix 1' - the Control Framework
data items
This DOES NOT mean that the data items are 'defunct', they
remain as a key statement of fact.
Concentration in phase II should be on processes and controls
that ensure data quality throughout the distribution chain.
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Control Framework
Next steps
• Analyse the risk rating data and engage with managing agents and
brokers during Q1
• Develop and commence communications with auditors
• Requests for extension reviewed by Lloyd’s, feedback on this in
February
New Stuff
• New Board sign off wording online – www.lloyds.com/controlframework
• Updated FAQs: TPA’s formulate part of scope for Phase III
• Recruiting for a new stakeholder manager
Please remember monthly status reports!
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Control Framework
Questions?
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Control Framework
Q&A
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Control Framework
Close
Further information on Control Framework – [email protected]
Next Breakfast Meeting – 18th February
www.lloyds.com/controlframework
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