The IT device directed IRM (Investor Relationship Management) is based on the cost accounting approach of decision-making structured on the basis of the expected losses (EL).

The EL is the indicator of Risk-Adjusted Performance Measurement on which the International bureau of accounting standards (IASB) and the Financial Accounting Standards Board (FASB) of the USA agreed to take into account the operational risk appetite or the risk profile of every entity, estimating from January 1st, 2014 within the framework of the regulations transposing the agreement Basel III, [according to the COSO (Committee Of Sponsoring Organizations of the Treadway Commission) reference table of internal control], its capacity to manage the convergence of interests of the stakeholders of value creation

•    Customers, Employees and Employers;
•    Banks, Insurances, Shareholders, financial Markets and Authorities of regulation.

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A / Value in use of IRM technology with regard to the existing

B/ Global Enterprise Risk Management System Framework (ERM)

C/ Reporting of Investor Relationship Management

D/ Legal basis

E/ Technical Basis

F/ Competitive position

G/ The global network of Professional Development

H/ Interest of the interdisciplinary collaboration

I/ Impact on employment

J/ Scientific legitimacy of the IRM technology

K/ The IRM Knowledge Board

L/ How to enter the IRM Program ?

M/ What is action research IRM under Basel III ?

N/ Client server interactions

A / Value in use of IRM technology with regard to the existing

Operational Risks are risks arising from the people, systems and processes through which a company operates.

The value of IRM is to improve the usefulness and relevance of financial reporting for stakeholders by providing Intranet application modules that are currently lacking in the existing computer system to make effective real-time, (outside  governance meetings),  operational interaction of internal control functions of the micro-economic processes of value creation based on the gap analysis:

•    Any economic entity is doomed to failure if the management system is not able to stimulate and take into account the effect of human resources on financial goals, including the People Value Added (PVA) resulting in additional variable income (premiums) ROI of the labor force of the employee;

•    An Information System which focuses solely on the nominal layout and the structure of the functions available is disconnected from risk management and corporate governance. This is more or less typical of the current situation, whereby Information Technology (IT) is indiscriminately being dedicated to every function.
 

B/ Global Enterprise Risk Management System Framework (ERM)

Running on a platform of Intranet modules which the economic entities of any business sectors reach by connection in totally secured SaaS (Software as a Service) mode, the system is dedicated to the process of structured decision-making based on operational risk data in two axes:

•    Interaction of internal control functions,
•    Counterparty Credit Risk Management (CCRM).

1 / The axis of interaction Internal Control

This axis is used by all the economic entities (SMEs, Large Accounts and Administrations of the State) to endow the functions of internal control of modules to be articulated in real time to supply to the server of the "Online Analytical Processing Center" (OLAPC) the data of operational risks for the taking of structured decisions:

a.    Managing the relationship with employees (Productivity , Employee satisfaction, psychosocial risks  and variable remuneration);
b.    Customer Relationship Management (CRM), including customer benefits, competitiveness and growth plans.

2 / The axis of Counterparty Credit Risk Management (CCRM)

This axis is used by investor (Banks, Insurances and Analysts of the financial market) in conformance with laws and regulations transposing the agreement of Basel III to feed tools of stochastic modelling with data of operational risk associated to every CCR (Counterparties Credit Risk):

2-1/ Credit lines and adjustment of the hedge fund considering cost savings measuring the risk profile of the CCR;

2-2/ Stress test of adequacy of stockholders' equity, in particular the minimal requirements of stockholders' equity for the operational risk;

2-3/ Cost savings of the establishment and the CCR reducing the capital to mobilize for the obligation of liquidity of cover in conformance with two standards:

a.    Liquidity Coverage Ratio (LCR) addresses the sufficiency of a stock of high quality liquid assets to meet short-term liquidity needs under a specified acute stress scenario.

b.    Net Stable Funding Ratio (NSFR) addresses longer-term structural liquidity mismatches.

To raise the resilience of banks to potential liquidity shocks, these standards should be implemented consistently as part of the global Enterprise Risk Management (ERM).
 
To this end, most of the specific parameters used in these metrics are internationally harmonised, with specific and concrete values.

 
C/ Reporting of Investor Relationship Management

The data of investor relations (financial communication) supplied by IRM reports below are particularly useful for updating the risk, especially when the financial and social quality of the CCR is deteriorating:

1.    The financial report on realised cost savings (foundation of economic parameters);

2.    The social report on the improvement of working conditions (foundation of social measurements 1);

3.    The social report on the state of psychosocial risk (social metric foundation of data 2).

 
D/ Legal basis

The majority of G20 countries and other countries have taken the initiative to implement the Basel III agreement in national laws:

-    The EU directive CRD4 and the regulation CRR integrating into the European law, for the 28 States, the international reform Basel 3 have been published in the Official Journal of the European Union on June 26th, 2013 (legislation L176);

-    These acts follow upon the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank Act) integrating Basel III into the federal legislation signed by President Barack Obama on July 21, 2010 (Pub.L. 111–203, H.R. 4173);

-    The Canadian OSFI Act was published in December 10th, 2012.

The majority of G20 countries and other countries have taken the initiative to implement the Basel III agreement in national laws:

-    The EU directive CRD4 and the regulation CRR integrating into the European law, for the 28 States, the international reform Basel 3 have been published in the Official Journal of the European Union on June 26th, 2013 (legislation L176);

-    These acts follow upon the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank Act) integrating Basel III into the federal legislation signed by President Barack Obama on July 21, 2010 (Pub.L. 111–203, H.R. 4173);

-    The Canadian OSFI Act was published in December 10th, 2012.

 
E/ Technical Basis

From January 1st, 2014, the issue of corporate governance and investor relationship changes from 1 January 2014: it will now focus on the decision-making structured on the basis of operational risk data associated to the CCR to manage the uncertainty in conformance with the standard ISO 31000:2009 made binding for all the business sectors by transpositions integrating into the national laws the reform Basel 3 of December, 2010.

The International Organization for Standardization’s ISO 31000:2009 conceptualized the term ‘risk’ for all operations concerned with risk management. In this standard, risk is no longer defined as chance or probability of loss but as “the effect of uncertainty on value creation objectives”.

Enterprise Risk Management modules to be articulated are those that contribute to the accounting approach gap analysis based on expected losses (EL). They are modules applied in:

-    Finance,
-    Human Resources Management (HRM) and
-    Operations Management.


F/ Competitive position

There is only one supplier of the technology of information directed IRM (Investor Relationship Management) on the market (Riskosoft Corporation):

-    Cf. The article proposed by a group of experts and academics of the European Union and the United States, peer-reviewed for the launch on the Basel III markets by ISACA Journal for the world network of 180 countries, under the title: "The Value in Using IT-directed Investor Relationship Management" (ISACA Journal, Vol. 6, Nov-Dec. 2013

ISACA (Information Systems Audit and Control Association), headquartered in the United States is the World Association of the Audit and Control Information Systems:

-    ISACA's members live and work in more than 180 countries and cover a variety of professional IT-related positions (IS auditor, consultant, educator, IS security professional, regulator, chief information officer and internal auditor);

-    They work in nearly all industry categories, including financial and banking, public accounting, government and the public sector, utilities and manufacturing.



G/ The global network of Professional Development

The objective is to make that all the business sectors have the chances of qualification the IRM (Investor Relationship Management) best practices for the conformity with the requirements of laws and regulations transposing Basel III.

The program mobilizes EXECUTIVE EDUCATION Teams of the MBA schools and universities of the world network for the implementation of the program developed by the scientific and technical committee constituting the IRM knowledge board:

a)    The concerned Professors are those whose teachings and researches are located in one of the functions of internal control to articulate in conformance with Basel III to supply every date of reporting Operational Risk Data associated to the CCR, to be taken in account to reduce uncertainty on the value creation objectives.

b)    The team also helps to adapt the students to operators' numerous jobs of Investor Relationship Management (IRM) and Online Analytical Processing Centers (OLAPC).



H/ Interest of the interdisciplinary collaboration

Forcing the stakeholders to articulate the functions of internal control (Finance, HRM and Management of the Operations) to supply the data of operational risk associated with the CCR (SMEs, Large Accounts and Administrations of the State), Basel III offers an extraordinary opportunity of interdisciplinary collaboration for the implementation of the international program on Continuing Professional Education (CPE) with on-line application workshops and the accompanied internships of research-action:

-    The possibilities of publication for the professors and the researchers participating in the implementation of Basel III are therefore particularly important.

Besides the structure of implementation of the international CPE program allows to participate without being overloaded.


I/ Impact on employment

A study is underway with international organizations on the impact of Basel III on employment.
ISACA Journal as well as the associated international bodies and the USA Bureau of Economic Analysis (Statistics of U.S. Businesses) wish to publish this study. The researchers will be co-authors of the study:

-    Particularly useful for the Labour Ministries, this study will also supply data for the projected management of the executives training program in the context of Basel III.



J/ Scientific legitimacy of the IRM technology

IRM is the field of technology and knowledge complementing the programme known as “dynamic stochastic general equilibrium” (DSGE), launched in 1995 which dominated teaching and research in macroeconomics. IRM technology is based on the collection and treatment of microeconomic data upstream stochastic calculations:

-    The calculation of asset pricing and impairment of assets is known as one of the most important problems of the finance market;

-    From the point of view of the investor, the risk is defined as the value expected from returns on investment in an indicated threshold.

In prescribing the approach to cost accounting focuses on the expected loss (EL), the Basel III allows any entity to integrate the self-regulatory mechanisms in its operation and governance:

-    Also called "homeostasis", this concept of cybernetics is used by social psychologists to explain the ability of an organization to embrace change by automating the analysis process and correction of deficiencies in order to maintain the socioeconomic balance allowing the system to continue to grow for the benefit of stakeholders.

The social psychology is the science of the interaction, formal and informal mechanism at the base of the group dynamics and organizational development:
-    The information technology directed IRM provides modeling system called "dynamic stochastic general equilibrium" (DSGE), microeconomic operational risk data without which macroeconomic calculations, including financial markets consensus are approximate or false and can lead to investment and government policies based on the theory of chance or speculative game denounced by the ISO 31000:2009.

The interest of the laws and the regulation transposing the agreement of Basel III is to center from now on the behavioural finance on the collective processes of interaction of structured decision-making based on data of the operational risk associated to the CCR:

•    While the economy is a social science, the Behavioural Finance (BF) was up to now based on the application of the differential psychology (psychology of the individual) in the finance (we also say "Behavioural Economy" or BE).




K/ The IRM Knowledge Board

The IRM Knowledge Board founding members are the experts and academics co-authors of the article to be published by ISACA Journal in the United States in November-December 2013.

The founding members will constitute, in association with the team of your institution, the scientific and technical structure of coordination of the program of the global network of the 180 countries grouped into 5 regions:

1.    Frank Bezzina, Ph.D., is the deputy dean of the Faculty of Economics, Management and Accountancy at the University of Malta.

2.    Pascal Lélé, Ph.D., is the research and development director at Riskosoft Corporation.

3.    Ronald Zhao, Ph.D., is associate professor at Leon Hess Business School, Monmouth University (New Jersey, USA).

4.    Simon Grima, Ph.D., is a lecturer of banking and finance at the University of Malta and the president of the Malta Association of Risk Management (MARM).

5.    Robert W. Klein, Ph.D., is associate professor and director of the Center for Risk Management and Insurance Research in the J. Mack Robinson College of Business at Georgia State University (USA).

6.    Martin Hellmich, Ph.D., is professor of financial risk management at the Frankfurt School of Finance & Management.



L/ How to enter the IRM Program ?

Two articulated process:

1/Install automatically your Intranet IRM

No need for additional computer equipment. IRM is based on the optimal use of the existing unchanged:

•    To connect and receive the confidential access codes for each of the functions of internal control, it is enough to the internal controller or to the financial director to complete the form of opening the account "Customer Intranet"

•    The procedure is the same for Online Workshops and the accompanied internships of the MBA Schools and Universities members of the world network of IRM In-service training for the free connection of their students, professors and researchers.

2/ Register your staff in the Professional Development Program IRM

The International Program of Continuing Professional Education delivers in the same conditions for all sectors and all countries, Certificates in Risk-Adjusted Performance Measurement:

a.    The CRAPM 1 & 2 to adjust and maintain the skills of managers and internal auditors in the regulatory framework of Basel III. This leadership development focuses on the one hand theoretical courses and workshops in a "training week" online or in the center; on the other hand an internship at the workpost ending by the writing a dissertation (Report of research-action accompanied remotely by a professor of the Executive Education team).

b.    The CRAPM 1 for operators' qualification of functions of internal control and Online Analytical Processing Centers (OLAPC). This training is limited to the workshops of the training week online or in center.

To register, please contact the MBA School or the University of IRM global network of your choice:

•    Candidates and Executive education Teams will find all the information, (detailed program, accession process to the network and modules for the automatic insertion of the program on their Web site) in a single document that you can download by using this link: Basel III-CPE Program (Terms of Collaboration).



M/ What is action research IRM under Basel III ?

Also called "participatory research" or "active learning", the IRM action-research refers to practical acquisition of knowledge and know-how of Enterprise Risk Management (ERM) by the joint of the functions of internal control contributing to the interactions of resolution of problem of value creation.

The Actors use the Intranet's modules IT-directed IRM dedicated to each function in three steps:

Step 1: identify the problem and set goals for the three-year plan for cost savings (Finance function);

Step 2: motivate, engage and measure the commitment of all employees, as well as psychosocial stress-related risks (HR function);

Step 3: engaging the business process cost savings planned for each indicators of value creation (factors or causes at the origin of operational risk losses) for every line of activity, every service or department and every employee; estimate in real time by the measure of the gaps, incite to the improvement of the result by the variable remuneration and bring report) the results in feedback (Operations Management function).

Providing the technological support of cost accounting needed to solve problems of value creation in real time operations, the research-action commits students and teachers of the IRM international program in a continuous and intensive interaction with industry. The research-action reinforces:

- The sharing of experiences in the industry,
- The understanding of  the needs of the industry,
- The sharing of resources and
- The employability.


N/ Client server interactions

The actors execute the of value creation processes by seizing in the modules of their interface of IRM the required data that they register for the server of the Online Analytical Processing Center (OLAPC). They receive on their intranet account the results treated in few seconds.