Operational Risk Management System with Statistical Control  Final Year Project Dah Sing Bank Operational Risk Management ...
Background <ul><li>Operational Risk Management Team (ORMT) </li></ul><ul><ul><li>Monitor risk level in Operation  </li></u...
Problem Statement Poor data accessibility Subjective & Passive control Poor in data interpretation Tedious process/  Non-v...
Solution Microsoft Access Database Management System A Comprehensive Package of Solutions  Statistical Control
Streamlined Process Slide  Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Contro...
Current procedure Coordinator Manager Coordinator
Current procedure 6 Coordinator Manager Coordinator
Current procedure 6 Coordinator Manager ORMT
Current procedure 6 Coordinator Manager Coordinator ORMT Coordinator
Improvement 7 Before After Working on the same platform 20 10
Streamlined Process ORMT Manager Coordinator 8
Data Analysis 9 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Control
Improvement <ul><li>Identify trend in data </li></ul><ul><li>Compare KRI records across departments </li></ul><ul><li>Obse...
1. KRIs Report 11
KRIs Report 12
2. Comparing a KRI across departments 13
Comparing a KRI across departments 14
3. KRIs Comparison 15
KRI Comparison 16
Automated Report Compilation 17 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical C...
Improvement <ul><li>Prepare quarterly report </li></ul><ul><li>Automated report generation </li></ul>18 Report compilation...
Monthly and Quarterly Report 19
Sustainable Design 20 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Control
Sustainable Design 21 Solution Changes in Human Resources Maintaining the KRI Library
Human Resources 22
Human Resources 23 Department Staff
Maintain KRI Library 24
Maintain KRI Library 25
Statistical Control on KRI 26 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Con...
Improvement <ul><li>Control limits are decided by e x perience </li></ul><ul><li>KRI are monitored individually </li></ul>...
Approach 1: Hotelling T 2  Control <ul><li>An existing Multivariate Control Chart  </li></ul>x y Historical data Out of co...
Approach 1: Hotelling T 2  Control <ul><li>Implementation Suggestion </li></ul>Verify their relationship in the system Ste...
Approach 1: Hotelling T 2  Control <ul><li>Implementation Suggestion </li></ul>Step 3 Phase 1: Establish the control Phase...
Approach 2: Operational Loss Control <ul><li>Establish control limits on 2 KRI values by a measurable managerial decision:...
Approach 2: Operational Loss Control 31
Approach 2: Operational Loss Control 31
Approach 2: Operational Loss Control 31
Conclusion 32 KRI Monitoring System <ul><li>The Online KRI Monitoring  System </li></ul><ul><li>The Excel designed for Hot...
Thank You Q & A
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Operational Risk Management System with Statistical Control

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Final year project with Dah Sing Bank on the development of Operational Risk Management System with statistical control

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  • Explain KRI, Threshold as Control limit
  • By using op loss, it is much better than setting the limits by experience only.
  • Operational Risk Management System with Statistical Control

    1. 1. Operational Risk Management System with Statistical Control Final Year Project Dah Sing Bank Operational Risk Management Team Kevin Chua Dorothy Kwok Advisor Prof. Fugee Tsung, Dr. Wei Jiang Teaching Assistant Maggie Ning Group Members Yin Ping Ip Shaw Liang Alex Yap Cho Wing Yan Yim Ming Tse
    2. 2. Background <ul><li>Operational Risk Management Team (ORMT) </li></ul><ul><ul><li>Monitor risk level in Operation </li></ul></ul><ul><li>Key Risk Indicator(KRI) Monitoring System </li></ul><ul><ul><li>Quantifies risk level of each department </li></ul></ul><ul><ul><li>3 users: Coordinator, Manager, ORMT </li></ul></ul>X 86 reports Dept Manager Dept Coordinator ORMT
    3. 3. Problem Statement Poor data accessibility Subjective & Passive control Poor in data interpretation Tedious process/ Non-value added Manager Coordinator ORMT KRI Report
    4. 4. Solution Microsoft Access Database Management System A Comprehensive Package of Solutions Statistical Control
    5. 5. Streamlined Process Slide Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Control Streamlined Process
    6. 6. Current procedure Coordinator Manager Coordinator
    7. 7. Current procedure 6 Coordinator Manager Coordinator
    8. 8. Current procedure 6 Coordinator Manager ORMT
    9. 9. Current procedure 6 Coordinator Manager Coordinator ORMT Coordinator
    10. 10. Improvement 7 Before After Working on the same platform 20 10
    11. 11. Streamlined Process ORMT Manager Coordinator 8
    12. 12. Data Analysis 9 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Control
    13. 13. Improvement <ul><li>Identify trend in data </li></ul><ul><li>Compare KRI records across departments </li></ul><ul><li>Observe relationship between KRIs </li></ul><ul><li>Graphical illustration: Chart and Scatter Plot </li></ul><ul><li> More effectively </li></ul>10 Eye balling  Time consuming  Poor performance Before After
    14. 14. 1. KRIs Report 11
    15. 15. KRIs Report 12
    16. 16. 2. Comparing a KRI across departments 13
    17. 17. Comparing a KRI across departments 14
    18. 18. 3. KRIs Comparison 15
    19. 19. KRI Comparison 16
    20. 20. Automated Report Compilation 17 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Control
    21. 21. Improvement <ul><li>Prepare quarterly report </li></ul><ul><li>Automated report generation </li></ul>18 Report compilation were done manually Before After
    22. 22. Monthly and Quarterly Report 19
    23. 23. Sustainable Design 20 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Control
    24. 24. Sustainable Design 21 Solution Changes in Human Resources Maintaining the KRI Library
    25. 25. Human Resources 22
    26. 26. Human Resources 23 Department Staff
    27. 27. Maintain KRI Library 24
    28. 28. Maintain KRI Library 25
    29. 29. Statistical Control on KRI 26 Streamlined Process Data Analysis Auto-Report Compilation Sustainable Design Statistical Control
    30. 30. Improvement <ul><li>Control limits are decided by e x perience </li></ul><ul><li>KRI are monitored individually </li></ul><ul><li>Introduce statistical control approach to control KRI </li></ul><ul><li>Methodology that monitor 2 KRI simultaneously </li></ul>Before After 27
    31. 31. Approach 1: Hotelling T 2 Control <ul><li>An existing Multivariate Control Chart </li></ul>x y Historical data Out of control points: action needed Monitoring data 28
    32. 32. Approach 1: Hotelling T 2 Control <ul><li>Implementation Suggestion </li></ul>Verify their relationship in the system Step 2 Step 3 Phase 1: Establish the control Phase 2: Monitoring the data <ul><li>Identify 2 correlated KRI </li></ul><ul><li>IT Failure </li></ul><ul><li>New Employee </li></ul>Step 1 Step 4 29 Time Line
    33. 33. Approach 1: Hotelling T 2 Control <ul><li>Implementation Suggestion </li></ul>Step 3 Phase 1: Establish the control Phase 2: Monitoring the data Step 4 29 Time Line
    34. 34. Approach 2: Operational Loss Control <ul><li>Establish control limits on 2 KRI values by a measurable managerial decision: Operational Loss </li></ul>Region: Operational Loss > Target Loss KRI 1 KRI 2 <ul><li>Relationship between </li></ul><ul><li>2 effective KRIs </li></ul><ul><li>Occurrence of Incidents A </li></ul><ul><li>Operational Loss type A </li></ul>Target Operational Loss per month for A, $ XX,XXX 30
    35. 35. Approach 2: Operational Loss Control 31
    36. 36. Approach 2: Operational Loss Control 31
    37. 37. Approach 2: Operational Loss Control 31
    38. 38. Conclusion 32 KRI Monitoring System <ul><li>The Online KRI Monitoring System </li></ul><ul><li>The Excel designed for Hotelling T 2 Control </li></ul><ul><li>A complete user manual & guide </li></ul>Deliverables Statistical Control Auto-Report Compilation
    39. 39. Thank You Q & A

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