Penny Cagan in conversation with Jonathan Howitt

Click here to view Penny Cagan's interview with Jonathan Howitt

The focus within the discipline of operational risk is different between the sell side and the buy side, because of the variety of different risks those two types of firms face.

"The real killer for the buy side is the tail risk," says Jonathan Howitt, head of operational risk at the Man Group, an alternative investment management firm based in London, "which usually is a relationship between operational and reputation risk. If there is any doubt about your fulfillment of  fiduciary duties, then that can be a killer for the institution. So the tail risk is more important for the buy side."

Howitt is speaking with Penny Cagan, managing director of credit content and First data, Opvantage data, in an Audio Insight interview. It is the first in a new series on operational risk issues from risk management software firm Algorithmics. Algorithmics also described some of the approaches that the Man Group took to build its operational risk framework in a recent article.

Howitt also discusses the importance of a firm-wide approach to reputational risk, as well as information and data gathering to managing operational risk effectively.

The Man Group

Man is a world-leading alternative investment management business. With a broad range of funds for institutional and private investors globally, it is known for its performance, innovative product design and investor service. Man manages around $40 billion. The original business was founded in 1783. Today, Man Group plc is listed on the London Stock Exchange and is a member of the FTSE 100 Index with a market capitalisation of around £4 billion. Man Group is a member of the Dow Jones Sustainability World Index and the FTSE4Good Index. Man also supports many awards, charities and initiatives around the world, including sponsorship of the Man Booker literary prizes.

Algorithmics

Combining web-based tools with software, advisory and award-winning external content, Algorithmics' operational risk solutions offer the industry's only fully integrated approach to the identification, management and measurement of operational risk in support of governance, risk and compliance (GRC) programs. Algo First is a database of external risk loss events that enables banks, insurance providers, pension funds, hedge funds and asset managers to proactively manage operational risk. Algorithmics' solution is the industry's only research tool that puts real-life case studies within an operational risk framework, making it ideal as a supplement to internal data for self-assessment and scenario modeling.

Containing more than 9,000 events, Algo First addresses exposures related to corporate governance, strategic issues, market practices and business risk. Detailed information on control breakdowns, event triggers and 'lessons learned' provides risk professionals with qualitative analysis unrivalled in its depth of analysis and industry coverage. Algo First is a web-based service available by annual subscription.

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