How on earth can regulators expect financial services firms to provide the right 'tone from the top' on operational risk, when they themselves so abjectly fail in this regard?
Why haven't we had a speech from Nout Wellink, president of the Netherlands Bank and chairman of the Basel Committee on Banking Supervision, purely on op risk issues in the current crisis? Where are the G-20 proposals about improving and strengthening the op risk framework at financial services firms? Why hasn't the US President's Working Group issued a paper focused on common themes in the operational failures banks have experienced, and proposed a strategy to confront those failures? Where is the advanced measurement approach on the Basel Committee's urgent list of papers expected in January?
The world's regulators are in danger of giving the impression that op risk is something firms need only devote time and resources to in the 'good times', when there is a bit of spare cash to throw at a funky, new discipline.
The truth is that, while op risk is indeed the coolest risk discipline around, it is not new, but rather completely woven into the fabric of firms - recognised in its presence in Pillar I.
Until now, many regulators have done much good work to raise the profile of operational risk - the efforts of the US Federal Reserve and the UK's Financial Services Authority spring readily to mind. But if regulators don't follow this up with a global, focused push to improve the attention paid to operational risk management within firms, and to raise the importance of operational risk as a discipline in general, overall we will lose much ground.
Even more to the point, regulators can hardly expect boards of directors and senior management to put operational risk high on their agendas, and set the right tone for the organisation, if regulators aren't doing it themselves, particularly in a time of crisis.
The year 2009 will be the 10th anniversary of OpRisk & Compliance magazine - to celebrate, we are planning a year of special editorial, online events and parties. To kick off, January's edition will include the "Top 50 faces of operational risk". I'm hoping 2009 will be a year to celebrate the successes of the operational risk discipline, but also a year in which the topic will be at the top of the agenda in the international debate about the future of the financial services industry.
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