Reflections on OpRisk Management
First published:
ISBN: 9781782723493
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What Regulators Want
What Regulators Want
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
The financial industry is global, so it’s not surprising that supervisors in different countries share common concerns when it comes to operational risk. Listen to regulators from the US Federal Reserve System, the Bank of England and the UK Financial Conduct Authority and you will hear a number of familiar themes. Whether you are a newly regulated entity or an approved person preparing for your first visit from regulators, it’s useful to bear in mind some essentials on how to demonstrate good practice.
KNOW YOUR KEY RISKS
One important question is so simple that it can sometimes be missed in the piles of files, reports and colourful risk charts: what are the main risks to your business? In other words, what are the adverse events that could harm your profitability or cause problems for your stakeholders, especially your customers?
The more you are specific about the risks and how they should be mitigated, the more you will demonstrate ability and credibility. Try to define risks as potential negative events, not as processes or control failures: “technology” is not a risk, it’s a theme. All firms rely on technology. Be more specific. Are parts of your systems outdated or in
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