Operation Risk Management 03

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This presentation gives a short glimpse on the process of risk Mgt. in banks

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Operation Risk Management 03

  1. 1. Operation Risk Management in Bank Source : Books written by Iyengar & Iyengar Presented by Mr. Baid Nath Singh IMIS, Bhubaneswar
  2. 2. Risk management is a systematic way of thinking <ul><li>“The risk management process increases awareness of hazards and risk involved in an operation” </li></ul>
  3. 3. Definition of Operational risk <ul><li>“It is the risk of loss resulting </li></ul><ul><li>from Inadequate or failed internal </li></ul><ul><li>processes, people and system or </li></ul><ul><li>from external events” </li></ul>External events Internal Causes People Processes Systems
  4. 4. Types of Operational Risks <ul><li>People risk </li></ul><ul><li>Process risk </li></ul><ul><li>Governance risk </li></ul><ul><li>Business operation risk </li></ul><ul><li>Environmental risk </li></ul><ul><li>IT risk </li></ul>
  5. 5. Operational Risk Management <ul><li>Objectives </li></ul><ul><li>Benefits </li></ul><ul><li>Process </li></ul><ul><li>1.Identification </li></ul><ul><li>2.Assesment </li></ul><ul><li>3.Monitoring and control/mitigation of this risk </li></ul>
  6. 6. Risk Identification <ul><li>Level 1 lists the main business activities/product/processes </li></ul><ul><li>Level 2 lists out the sub category </li></ul><ul><li>Level 3 lists out the product offered </li></ul><ul><li>Recording of various risk events-experience, judgement, linked events and regulatory requirement. </li></ul>
  7. 7. Risk Assessment <ul><li>Risk&control self-Assesment,RCS </li></ul><ul><li>Self-Assessment process </li></ul><ul><li>Process mapping </li></ul><ul><li>Key risk indicators </li></ul>
  8. 8. Risk Monitoring <ul><li>Operational risk loss events </li></ul><ul><li>Self-Assessment survey </li></ul><ul><li>Key risk indicator limits (KRI) </li></ul><ul><li>Management information system (MIS) </li></ul><ul><li>Audit reports </li></ul>
  9. 9. Risk control/Mitigation <ul><li>Risk prevention </li></ul><ul><li>1.Policies and procedures </li></ul><ul><li>2.Internal control system </li></ul><ul><li>Risk reduction </li></ul><ul><li>Risk mitigation tools </li></ul><ul><li>Risk transfer </li></ul>
  10. 10. <ul><li>Proper Coordination / Control / Information flow between risk management & risk taking units </li></ul><ul><li>Data and IT System </li></ul><ul><li>Training </li></ul>
  11. 11. Thank you

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