Practical Operational Risk Management - MITPM Conference

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Practical Operational Risk Management - MITPM Conference

  1. PRACTICAL OP RISK MANAGEMENT Selena Sol presents….. selena@selenasol.com http://www.linkedin.com/pub/eric-tachibana/0/33/b53 http://www.slideshare.net/selenasol A practical summary for the career curious
  2. WHY WHAT 1 2 WHO3 QUESTION Who among you would brag to your friends about getting a fun-filled job in •Risk Management •Compliance •Information Security •Audit
  3. I’ve got 3 words for all of you who didn’t raise your hands… RISK IS WHY WHAT 1 2 WHO3
  4. WHY WHAT 1 2 WHO3 SEXY!!!
  5. PROFIT = WHY WHAT 1 2 WHO3 REVENUE - COST
  6. PROFIT = REVENUE - COST RISK PROTECTS REVENUE •Platform failure stops revenue flow •Platform limitation prevents expansion into new markets •Regulatory Capital tied up and uninvestable •Our stock price tanks due to crash •Customers just don’t trust us RISK REDUCES COST • We’re fined by regulators • We are inundated with external and internal audits • Civil actions • More resources devoted to fire fighting issues Risk is sexy because your CEO thinks it’s sexy (read as more jobs, higher profile, more comp) WHY WHAT 1 2 WHO3
  7. WHY WHAT 1 2 WHO3 Sell Operational Risk Deliver/Build Supply Business & Strategic Mgmt Market & Credit Risk
  8. INHERENT RISK – CONTROLS = RESIDUAL RISK WHY WHAT 1 2 WHO3
  9. INHERENT RISK – CONTROLS = RESIDUAL RISKWHY WHAT 1 2 WHO3 What are the sources of operational risk? • People • Process • Systems • External events How do you know where to look for risk? • Standards-setting bodies • Common sense How do you go about looking for risk? • Formal process to self id issues • Internal & external assessors Risk is sexy because you get to experience the total firm
  10. INHERENT RISK – CONTROLS = RESIDUAL RISK WHY WHAT 1 2 WHO3 What do controls do? • Prevent • Mitigate • Recover How do you govern controls? • Staff the function • Strategically align risk with culture & values • Prioritize & handle exceptions • Standardize as appropriate • Test • Report • Continuously improve Risk is sexy because it is really challenging to succeed
  11. INHERENT RISK – CONTROLS = RESIDUAL RISK WHY WHAT 1 2 WHO3 What do you do with residual risk? • Remediate it – “Go to Green” • Monitor it • Ignore it (be careful of black swans) • Discover it (don’t forget the unknown)
  12. WHY WHAT 1 2 WHO3 From where can you enter Op Risk Mgmt? •From IT •From Operations •From the Front Office •From business or change management •Right out of school Where can you go to after Op Risk Mgmt? •To IT Management •To Operations Management •To Front Office Risk •To Senior Management Risk is sexy because it offers you so many career opportunities
  13. RISK = SEXY •MONEY & POWER •EXPERIENCE THE TOTAL FIRM •CHALLENGING WORK •CAREER OPPORTUNITY

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