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Our Risk Focus for 2022

Client Partners Our Risk Focus for 2022

Our Risk Focus for 2022 
By Sara Avery, Senior Vice President and Chief Risk Officer

It’s been a challenging two years across the industry. Few companies could have prepared for a global pandemic in which record-low interest rates would trigger massive home buying and refinancing on one hand and unprecedented requests for borrower forbearance on the other hand.

On top of all that, there were hundreds of regulatory compliance changes — all demanding “immediate action.” It was all urgent, except there weren’t any employees in the office to put them into effect; companies needed to implement an alternative working model and still get things done. It’s like raking your lawn while the wind keeps changing direction. As a result of all this regulatory change, we will be strengthening our three lines of defense throughout 2022.

Strengthening Our Three Lines of Defense

Risk management isn’t about eliminating risk. It’s about understanding risk, and then being able to size it and effectively manage it. Significant work was completed a few years ago in building out the Enterprise Risk Management program and the three lines of defense, so many of the foundations are in place. Risk management also requires being fluid rather than static. As our business has grown and our processes matured, we must continually reevaluate current programs and processes and implement enhancements where needed.

Business Controls

Lynn Tarantino, Senior Vice President and Chief Control Officer, is currently working with her Business Control Team. Under the leadership of Stephen Benetz, Vice President, Business Control and Assurance, we will be reevaluating the current Risk and Control Matrices (RCMs), performing control effectiveness testing and implementing an updated Risk and Control Self-Assessment (RCSA). This effort, which has been underway for months, will enable us to understand our risk profile at any given point in time.

Issues Management

Scott Goldman,  Vice President of Issues Management, joined Cenlar in the fall of 2020, and will lead Issues Management. This group, which was recently centralized under the Control Office Team, will bring standardization to issues management processes, project management support to issue owners and centralization of oversight and reporting of issues.

Operational Change Management

Managing change is a critical component of successful sustainability. Several months ago, under the leadership of Allyson Kiesel, Director of Operational Change Management, we established an Operational Change Management team. The team is responsible for maintenance of our policies, programs, procedures and processes. The team will ensure operational changes are identified through servicing vendor enhancements and client contracts, and that process changes are tracked, implemented and tested.

Our Enterprise Risk Management team is also spearheading enhancements to complementary second line programs. They are updating policies and standards related to Risks and Controls, RCSA’s, Issues Management and Monitoring and Reporting. Kurt Kremstein, Vice President and Chief Operational Risk Officer, is heading this effort.

It is also important for the support infrastructure to evolve as time passes and a company’s business models grow, contract and change. Our new risk management structure will enable greater flexibility and result in a stronger ability to use risk data to help tell our story and inform management’s prioritization where additional investments may be needed.

The biggest factor in managing risk comes down to the people. Do the programs enable and empower the first line business leads to understand their environment and take action where needed? Are the risks understood and have the appropriate processes been implemented to ensure our operations remain within our risk appetite? Are we effectively reporting on the state of the operations and residual risk? Each of the areas play a critical role in practice. As our three lines of defense mature, our team will be in a better position to align programs and solidify processes. 

I have been tremendously impressed by the engagement of Cenlar employees in this effort, from the leadership team down to each of the business units. Their understanding and willingness to participate in managing risk has been highly encouraging and I am very optimistic that, as we are looking ahead, we will be stronger than ever.

Sara Avery joined Cenlar in September 2021. Prior she was Chief Risk Officer for Common Securitization (CSS) a financial technology joint venture that supports back office securitization for Fannie Mae and Freddie Mac. Before CSS, Sara spent nearly a decade working with Freddie Mac in a variety of leadership roles across risk management, including risk, credit risk and third- party risk management.