A brief intoduction on the relevance of operational risk management in achieving sustainable competitive advantage

1. Operational Risk Management
– A Strategic Approach to Business Sustainability

2. Outlook
 For any business to succeed and stay ahead of the
pack, these ingredients are required:
 A well thought out plan
 A business model that creates a unique identity
 A culture that is strong and cannot be imitated
 These ingredients make up what can be termed as the
“Strategy” of the organization
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

3. Features of a Good Strategy
 Transforms the organization continuously
 Target driven with short, medium and long term goals
 Formal and Confidential document that is made up of
interlinked checklists
 Provides details on input requirements – engine required
to drive and achieve goals
 Is the ‘Daily Guide’ of the organization, and is reviewed
periodically
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

4. Points of Leverage
 Achieved with the existence of an All-In Mentality –
goals are individually and collectively driven
 Is driven by a Strong Culture
 Aims at goals that are of Common Interest
 Ensures Internal Integration
 Responds to the Environment
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

5. Dimensions of A Strategy
Micro and Macro Issues
Personal vs. Input
Corporate Interest requirements
Process
Output / Achievement
requirements
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

6. Contexts To Consider
 International Influence
 Industry Leadership
 Organisational Growth
 Managerial Ability
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

7. Points to Ponder On
 For an organization to remain relevant, it must have a
strategy for achieving Competitive Advantage
 To have the right Strategy, it must have the right Outlook
 To achieve the Strategy it must have the right resources
– people, processes, systems and response to shocks
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

8. Long and Short…
 No Strategy can achieve its goals without a plan to
manage:
 People resources
 Processes
 Systems
 External / Unforeseen Events
A Strategy is achieved when these resources are
optimally managed
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

9. To effectively manage these
issues, optimal Operational Risk
Management is non-
negotiable...
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

10. Introducing Operational Risk
Management (OpRisk)
 OpRisk manages the loss or risk of loss resulting from
improper or non-management of people, process,
system and externally triggered issues
 It measures:
 The probability that business objectives may not be
met due to operational issues
 The degradation, effectiveness and consistency in
managing operational issues
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

11. Components of OpRisk Mgt
 People Risk Issues
 Process Risk Issues
 System Risk Issues
 External Risk Events
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

12. Tools of OpRisk Mgt
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

13. People Risk Issues
 Quality of Recruits; Sourcing and Selection strategy
 Controls embedded in the recruitment process such as
background checks
 Retention strategy for top-talents
 Strategy for training; Acculturation of staff
 Monitoring Attrition rate and concentrations
 Managing and benefiting from staff exits
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

14. Crfocus.wordpress.com
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

15. Process Issues
 Effectiveness of process designs – simple or complex;
flexible or rigid
 Manual vs. Automated processes
 Cost effectiveness of process controls
 Performance gradient offered
 Adequacy of embedded controls; Execution of controls
 Vendor Management
 Occupational Health & Safety Issues
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

16. Lazypm.blogspot.com
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

17. System Issues
 Availability of core applications / systems
 Network intrusion
 Denial of service
 Data corruption / Sabotage
 Unauthorised Access to Information
 System Penetration Issues
 Virus Attack
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

18. www.computerweekly.com
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

19. External Events
 Adherence to Regulatory Stipulations
 Legal Risk Management
 Business Continuity Management
 Compliance Risk Management
 Shift in Industry trends; Global trends
 Macro-economic conditions
 Available Infrastructure
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

20. OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

21. Points of Leverage Sorted
 All-In Mentality – People Strategy
 Strong Culture – People + Processes Strategies
 Common Interest – People Strategy
 Internal Integration – People + Processes + Systems +
External Response Strategies
 Responds to the Environment – People + Processes +
Systems + External Response Strategies
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

22. Drivers of OpRisk And Strategy
OpRisk Management Strategy
Focused on sustainable Drives and Delivers Value
Value Creation Creation
Is inherent in all business Determines Business
activities Activity
Ensures Risk Optimal Is built on Meaningful Risk
Mitigation Taking
Measured by Risk Measured by Performance
Indicators Indicators
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

23. OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

24. Food for Thought
Is Operational Risk
Management not integral
in achieving your
organization’s Strategic
Goal and Competitive
Advantage?
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

25. Thank you...
Eneni Oduwole
Group Head, Operational Risk Management
Guaranty Trust Bank Plc
eneni.oduwole@gtbank.com
234-8033045896
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013