Operational Risk Management


  • OUR CLIENTS' CHALLENGES
    • How can we have a comprehensive grasp of all our key operational risks, across businesses, support groups, geographies?
    • What are the key risks that can introduce most unexpected losses and what are these?  What else is major on the horizon that we may not have anticipated?  Have we adequately provided for such eventualities?
    • Are we adequately capitalized to cover for potential losses that might result from such eventualities?  Is our risk capital provision adequate?  Too much?
    • How can we have a responsive process that will trigger through the enterprise in event of an incident; especially those that will lead to high unexpected losses?  How do we ensure the signs and symptoms leading to such eventualities are sniffed out early and appropriate mitigating and recovery actions taken to address these in a timely manner

     

    While Operational Risk is hardly new, it has certainly been drawn into the limelight during the last few years.  Now with market and credit risks being more rigorously assessed, Operational Risk remains the unfortunate wildcard in a number of financial institutions' ill-fortune in the recent days and over the last decade (SocGen, Barings, Sumitomo, Daiwa, etc).  There has also been increased regulatory attention, including moves towards not just adequate provision and the allocation of capital to cover operational risk, but also proactive management of operational risks.

    It can be argued that many of today's credit crisis and failures in the financial markets are in no less ways attributed also to poor operational risk management.  It is easy to just ascribed these to poor credit risk disciplines and management; but the root goes deeper.  It touches the very essence of governance and lack of good operational risk management practices.

    Whilst some may consider Operational Risk insurance as a potential easy way of risk transfer, it is increasing important for management to progress beyond lip-service of management of internal controls.  In recent years, shareholders have been more willing to call management to account and seek satisfaction as to incorporation and implementation of good and effective controls.  Key principles in good management (as set out, for example, in the UK’s Cadbury and Turnbull reports) focus on the importance of controls with directors’ sign-off now a standard part of the process.  Operational Risk cover will be predicated by corporation being able to demonstrated effective governance and internal control standards and practices.  Also, deductibles on operational risk insurance are likely to be high enough to keep management incentivised to maintain good controls.  Despite the existence of insurance, companies nearly always continue to practice good controls over any area of risk management which is covered by insurance e.g. buildings’ contents are often protected by security personnel, sign-in procedures and swipe cards.

    Operational Risk Management services address the risks associated with on-going business operations, systems, technology and major change initiatives.  We focus on enabling technologies and processes that impact business controls through core services.  Our specific areas of management include:

    Operational Risk Management helps clients manage core operational risk, especially those related to the reliability of business operations, mergers, acquisitions and divestitures, major projects and investments.

     
    Our Services

    • Operational Risk and Control Evaluation.
    • Enterprise-Wide Operational Risk Assessment
    • Enterprise-Wide Operational Risk Management
    • Operational Risk Framework Design and Implementation.
    • Operational Risk Measurement and Risk Capital Allocation
    • Enterprise-Wide Operational Risk Management Monitoring.
    • Operational Risk Management Training.
    • Operational Risk Solutions
    • Operational Risk Management Best Practices Benchmarking