This document provides an overview of operational risk management. It argues that risk management is a sexy career path for three reasons: 1) Risk management protects revenue and reduces costs, ensuring profitability which leads to more jobs, higher profiles, and greater compensation. 2) Working in risk management provides the opportunity to experience all aspects of a firm. 3) Risk management presents challenging work and offers many career opportunities both within and outside of risk functions like moving into IT, operations, or senior management.

1. PRACTICAL OP RISK
MANAGEMENT
Selena Sol presents…..
selena@selenasol.com
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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