Reflections on OpRisk Management
First published:
ISBN: 9781782723493
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How to Minimise ‘People Risk’
How to Minimise ‘People Risk’
Introduction
Operational Risk in Four Letters
An Invisible Framework
Small is Beautiful in OpRisk Management
The Business Value of ORM
How to Minimise ‘People Risk’
The Missing Piece
Risk Appetite and Framework
From Russian Roulette to Overcautious Decision-making
The Importance of Preventive KRIs
How to Build Preventive Key Risk Indicators
Unlocking KRIs
Six Steps for Preventive KRIs
Have Your Cake and Eat It
Conduct, Not ‘Conduct Risk’
How to Manage Incentives
Is Reputation Risk Overstated?
What Regulators Want
Conduct & Culture
OpRisk Takes Forward Steps at OpRisk Europe 2014
Modern Scenario Analysis
The Rogue’s Path
Rogue Trading No Training: The Connections
What Brexit Teaches OpRisk
OpRisk Survey Shows the Insidious Effects of Political Risk
Discarding the AMA Could Become a Source of OpRisk
UCL Research Shows that SMA Reforms Introduces Capital Instability and Discourages Risk Management
Memo to Bank CEOs: Treat OpRisk with More Respect
Don’t Let the SMA Kill OpRisk Modelling
People, processes and systems form the building blocks of all internally generated operational risk, and “people risk” is often considered the largest risk of all. This is hard to argue with, but, 15 years into the development of operational risk management in the financial services, one could have expected more advances in people risk management.
Human resources functions and operational risk managers seem, in most cases, to ignore the similarities of their scope and, more so, the necessity of their alignment. The 2014 OpRisk benchmarking survey found that the operational risk function was formally involved in the discussions related to compensation and bonuses for only 19% of the respondents, and was not even consulted in 38% of cases. Similarly, only 27% of the organisations surveyed stated that operational risk limits were included in front-office compensation.
It is time both functions acknowledge the crucial role of proper HR risk management in every organisation and make use of each other’s talents and expertise. Thankfully, some organisations – and some enlightened HR managers – are acutely aware of their risk management role, rightly considering that managing
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