Operational risk management has evolved over time as organizations seek to systematically manage risks. Key concepts include inherent risk, likelihood, exposure, and treatments like transfer, accept, and optimize. Operational risk can arise from organization, processes, technology, human factors, or external events. It is measured using tools like control and risk self-assessments to identify threats, controls, and residual risks. The goal is integrated risk management to both control risks and create shareholder value through efficiency and competitive advantage.
The document outlines the National Bank of Malawi's operational risk management framework. It discusses the operational risk policy, roles and responsibilities of the board, management, and risk division. It describes the bank's approach to identifying, assessing, monitoring, and controlling operational risk. The bank has adopted the Basic Indicator Approach to measure operational risk capital charge and has developed business continuity plans to prepare for disasters. The presentation also discusses operational risk incident management guidelines and roles in reporting and addressing incidents.
The document discusses risk management and its process groups. It defines risk and characteristics of risk. It then describes the six risk management process groups: 1) Plan Risk Management 2) Identify Risks 3) Perform Qualitative Risk Analysis 4) Perform Quantitative Risk Analysis 5) Plan Responses 6) Control Risks. Each process group has specific inputs, tools and techniques, and outputs involved in identifying, assessing, and managing project risks. The overall purpose is to systematically manage uncertainty and increase the likelihood of achieving project objectives.
This document provides an overview of risk management. It discusses the role of employees in risk management as the "first line of defense" and "eyes and ears" of the organization. It describes unusual occurrences and critical incidents as methods to capture risks, with the goal of reporting and learning. The risk management framework involves risk assessment, profiling organizational risks, and mitigating risks. Effective risk management is a shared responsibility requiring engagement from all levels of an organization through communication in a risk network.
The document discusses risk management, including what it is, who uses it, and how it is applied in customs. Specifically:
- Risk management is a systematic process of identifying, analyzing, and responding to risks to reduce losses and take advantage of opportunities. It is used widely in both public and private sectors.
- The key steps in risk management are establishing the context, identifying and analyzing risks, evaluating risks, treating risks, and ongoing communication, monitoring and review.
- Customs administrations use risk management strategies to facilitate trade while maintaining control over cross-border movement of goods and people. It helps customs prioritize resources according to risk level.
The document discusses project risk management and outlines six processes for managing risk: risk management planning, risk identification, qualitative risk analysis, quantitative risk analysis, risk response planning, and risk monitoring and control. It provides details on tools and techniques used in each process, such as documentation reviews, information gathering, probability and impact matrices, and quantitative risk analysis modeling. The overall goal of risk management is to increase the probability of positive events and decrease the probability of negative events on a project.
This document summarizes a website that provides information and resources for project managers on risk management. It includes definitions of project risk, descriptions of the risk management process and tips for identifying, prioritizing, and managing risks. Specific topics covered include risk identification techniques, using a risk matrix, the risk register form, and different strategies for responding to risks such as mitigation, transfer, avoidance and acceptance. Flowcharts and diagrams are provided to illustrate risk management concepts and processes.
The document outlines the National Bank of Malawi's operational risk management framework. It discusses the operational risk policy, roles and responsibilities of the board, management, and risk division. It describes the bank's approach to identifying, assessing, monitoring, and controlling operational risk. The bank has adopted the Basic Indicator Approach to measure operational risk capital charge and has developed business continuity plans to prepare for disasters. The presentation also discusses operational risk incident management guidelines and roles in reporting and addressing incidents.
The document discusses risk management and its process groups. It defines risk and characteristics of risk. It then describes the six risk management process groups: 1) Plan Risk Management 2) Identify Risks 3) Perform Qualitative Risk Analysis 4) Perform Quantitative Risk Analysis 5) Plan Responses 6) Control Risks. Each process group has specific inputs, tools and techniques, and outputs involved in identifying, assessing, and managing project risks. The overall purpose is to systematically manage uncertainty and increase the likelihood of achieving project objectives.
This document provides an overview of risk management. It discusses the role of employees in risk management as the "first line of defense" and "eyes and ears" of the organization. It describes unusual occurrences and critical incidents as methods to capture risks, with the goal of reporting and learning. The risk management framework involves risk assessment, profiling organizational risks, and mitigating risks. Effective risk management is a shared responsibility requiring engagement from all levels of an organization through communication in a risk network.
The document discusses risk management, including what it is, who uses it, and how it is applied in customs. Specifically:
- Risk management is a systematic process of identifying, analyzing, and responding to risks to reduce losses and take advantage of opportunities. It is used widely in both public and private sectors.
- The key steps in risk management are establishing the context, identifying and analyzing risks, evaluating risks, treating risks, and ongoing communication, monitoring and review.
- Customs administrations use risk management strategies to facilitate trade while maintaining control over cross-border movement of goods and people. It helps customs prioritize resources according to risk level.
The document discusses project risk management and outlines six processes for managing risk: risk management planning, risk identification, qualitative risk analysis, quantitative risk analysis, risk response planning, and risk monitoring and control. It provides details on tools and techniques used in each process, such as documentation reviews, information gathering, probability and impact matrices, and quantitative risk analysis modeling. The overall goal of risk management is to increase the probability of positive events and decrease the probability of negative events on a project.
This document summarizes a website that provides information and resources for project managers on risk management. It includes definitions of project risk, descriptions of the risk management process and tips for identifying, prioritizing, and managing risks. Specific topics covered include risk identification techniques, using a risk matrix, the risk register form, and different strategies for responding to risks such as mitigation, transfer, avoidance and acceptance. Flowcharts and diagrams are provided to illustrate risk management concepts and processes.
Risk Management Process And Procedures PowerPoint Presentation SlidesSlideTeam
The document outlines the risk management process and procedures for a company. It introduces risk management and identifies types of risk categories. It then describes the procedure for managing risks, which includes risk planning, identification, assessment, monitoring and tracking. Tools and practices for risk analysis are also covered, along with engaging stakeholders. The document closes with an overview of the risk management lifecycle.
This document discusses risk management in corporate projects. It defines risk as uncertainty that matters, which can include both threats and opportunities that positively or negatively impact project objectives. Risks come in four types: event risks involving uncertain future events, variability risks where certain events have uncertain characteristics, ambiguity risks where the characteristics of certain events are unknown, and emergent risks involving unknown unknowns. The key phases of risk management are identified as risk identification, assessment, response, and monitoring/control. Response strategies should address both threats and opportunities. Managing risk is important for achieving project objectives on time and on budget while also finding potential benefits.
Enhance your audiences knowledge with this well researched complete deck. Showcase all the important features of the deck with perfect visuals. This deck comprises of total of thirty one slides with each slide explained in detail. Each template comprises of professional diagrams and layouts. Our professional PowerPoint experts have also included icons, graphs and charts for your convenience. All you have to do is DOWNLOAD the deck. Make changes as per the requirement. Yes, these PPT slides are completely customizable. Edit the colour, text and font size. Add or delete the content from the slide. And leave your audience awestruck with the professionally designed Risk Identification Powerpoint Presentation Slides complete deck.
A new emphasis on enterprise risk management from regulators has heightened awareness among bankers to get educated and adopt these best practices at their institution. In response to this increased focus, the RMA ERM Council developed the ERM framework and associated competencies, which became the foundation for a series of highly practical workbooks for implementing effective ERM.
operations risk management power point presentation.Miyelani Shibambo
Operational risk can result in losses from internal failures or external events. It is classified based on frequency and impact of events. Management typically focuses on low frequency/high impact events and high frequency/low impact events. The Basel Accords define three approaches to operational risk capital requirements: Basic Indicator, Standardized, and Advanced Measurement. The Standardized Approach divides business activities into eight lines and assigns a beta multiplier to each line's gross income. The Advanced Measurement Approach uses banks' internal models to calculate regulatory capital.
Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters.
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Implementation of Enterprise Risk Management with ISO 31000 Risk Management S...PECB
The webinar covers:
• The start of any Enterprise Risk Management Program
• The approach to developing a framework that will assist organizations to integrate RM into their enterprise-wide risk management systems
• The relationship between the foundations of the risk management framework and their objectives
Presenter:
This webinar was presented by M. Youssef K, an executive consultant & trainer with several qualifications. He is an accomplished expert with over 10 years’ experience in the field of risk management, project and program management, PRINCE 2, Agile, EVM, business process analysis and design, as well as operational and organizational excellence.
Link of the recorded session published on YouTube: https://youtu.be/9fO-JqENL0I
This document discusses operational risk management. It begins by defining risk management and the types of risks, including operational risk. It then discusses why operational risk management is important, highlighting some significant operational risk events. It describes tools for identifying and monitoring operational risk, such as loss data collection, risk and control self-assessments, and key risk indicators. It also discusses approaches for measuring operational risk capital requirements under Basel II and III, including the basic indicator approach, standardized approach, and advanced measurement approach. Finally, it notes some challenges in measuring operational risk and ways to mitigate and control operational risk exposures.
Operational Risk Management under BASEL eraTreat Risk
Operational risk have always ignored by Banks as they thought Credit and market risks can cause catastrophe. But history of misfortunes taught us different lessons. Controls and internal audit have long been construed as guard till BASEL II dictates forced banks to look with insight. Understand the dimension of ORM in this presentation.
This document discusses risk management. It defines risk as a potential problem that may or may not occur. Risks are characterized by uncertainty and potential loss. Risks are categorized as project risks, technical risks, business risks, known risks, predictable risks, and unpredictable risks. The document outlines the steps of risk management as identifying risks, analyzing their probability and impact, ranking risks, and developing contingency plans for high probability/impact risks. It also describes how a risk table can be used to project risks by listing the risk summary, category, probability, impact, and pointer to the risk management plan.
Operational Risk Management - A Gateway to managing the risk profile of your...Eneni Oduwole
This document provides an overview of operational risk management (ORM). It defines operational risk and ORM, outlines the core principles and framework of ORM. It describes the elements of ORM including people, process, system and external risks. It discusses ORM procedures such as risk and control self-assessment, key risk indicators, and loss incident reporting. It also introduces some common ORM tools and highlights the benefits of implementing ORM such as improved quality, cost savings, stability of earnings and enhanced competitive position.
The document discusses risk management frameworks and processes. It provides:
1) An overview of risk management, including highlighting risks at the project, program, and portfolio levels.
2) A risk management framework involving establishing context, risk identification, analysis, evaluation, and treatment.
3) Details of risk governance, including risk management plans, risk registers, governance documents, and ongoing and discrete risk activities.
This document discusses different types of risk associated with investments including market risk, interest rate risk, inflation risk, business risk, credit risk, and exchange rate risk. It also discusses risk management, which involves identifying, analyzing, and mitigating risks. Key aspects of risk management include using a scientific approach, considering both insurable and uninsurable risks, and focusing on reducing the cost of handling risk. Risk management systems help gather risk information and allow analysis from different perspectives to inform the risk management process.
Every organization needs to adapt to the ever-changing business environment. Sensing this need, we have come up with these content-ready change management PowerPoint presentation slides. These change management PPT templates will help you deal with any kind of an organizational change. Be it with people, goals or processes. The business solutions incorporated here will help you identify the organizational structure, create vision for change, implement strategies, identify resistance and risk, manage cost of change, get feedback and evaluation, and much more. With the help of various change management tools and techniques illustrated in this presentation design, you can achieve the desired business outcomes. This business transition PowerPoint design also covers certain related topics such as change model, transformation strategy, change readiness, change control, project management and business process. By implementing the change control methods mentioned in the presentation, you will be able to have a smooth transition in an organization. So, without waiting much, download our extensively researched change management framework presentation. With our Change Management Presentation slides, understand the need for change and plan to go through it without any hassles.
Risk Management Process Steps PowerPoint Presentation Slides SlideTeam
It covers all the important concepts and has relevant templates which cater to your business needs. This complete deck has PPT slides on Risk Management Process Steps PowerPoint Presentation Slides with well suited graphics and subject driven content. This deck consists of total of fifty four slides. All templates are completely editable for your convenience. You can change the colour, text and font size of these slides. You can add or delete the content as per your requirement. Get access to this professionally designed complete deck presentation by clicking the download button below.
This document provides an agenda and presentation materials for a workshop on strategic risk management. The workshop is organized by MakeITWork Consulting ME and will take place in Ramallah, Palestine. The agenda covers topics such as defining risk, the importance of risk management, enterprise risk management as a factor for organizational success, developing a simple strategy and framework for ERM, and benefits of Basel III recommendations for risk management practices. One session introduces the speaker, Dr. Jorge Vaz Girão, who has over 30 years of experience in program, project, and risk management.
Operational Risk Management Under Basel II & Basel IIIEneni Oduwole
This presentation discusses operational risk under Basel II and III. It provides an overview of the evolution of Basel guidelines and the focus of the Basel II framework on providing capital standards for banks to mitigate financial and operational risks. It defines operational risk and discusses the approaches to estimating capital - basic indicator, standardized, and advanced measurement. The presentation notes some pitfalls of Basel II and the focus of Basel III on increased capital requirements and liquidity standards. It addresses ongoing challenges in operational risk management and potential improvements.
Operational risk can arise from inadequate or failed internal processes, people and systems or from external events. It can be measured using a top-down approach such as the Basic Indicator Approach which calculates capital as 15% of average gross income, or the Standardized Approach which divides activities into business lines each with a factor. A bottom-up approach uses internal loss data but has challenges around position equivalence, completeness, and context dependence. Key risk indicators can also be used to signal potential operational losses.
Risk management is the process of identifying and mitigating risks that may have a positive or negative impact on a project. It includes risk management planning, identification, analysis, response planning, and monitoring and control. Analyzing risks qualitatively and quantitatively helps prioritize them so appropriate responses can be developed, such as avoiding, transferring, mitigating, or accepting risks. Monitoring risks ensures new risks are identified and risk responses remain effective over the project lifecycle. The benefits of effective risk management include more efficient resource use, continuous improvement, fewer failures, and enhanced communication and accountability.
Risk management involves determining the probability and impact of process failures and mitigating risks likely to occur with severe impacts. An acceptable risk is determined by evaluating options and consequences to select the most acceptable one. Risk severity is the probability of an event multiplied by its potential negative impact. Ways to deal with risk include proactive risk management to reduce probabilities and impacts, and reactive crisis management with constrained options. The CAPA system connects to risk management by using risk assessments to prioritize CAPAs and elevate issues. An annual product review examines manufacturing, quality, and post-market records over the previous year to support management decisions.
Risk Management Process And Procedures PowerPoint Presentation SlidesSlideTeam
The document outlines the risk management process and procedures for a company. It introduces risk management and identifies types of risk categories. It then describes the procedure for managing risks, which includes risk planning, identification, assessment, monitoring and tracking. Tools and practices for risk analysis are also covered, along with engaging stakeholders. The document closes with an overview of the risk management lifecycle.
This document discusses risk management in corporate projects. It defines risk as uncertainty that matters, which can include both threats and opportunities that positively or negatively impact project objectives. Risks come in four types: event risks involving uncertain future events, variability risks where certain events have uncertain characteristics, ambiguity risks where the characteristics of certain events are unknown, and emergent risks involving unknown unknowns. The key phases of risk management are identified as risk identification, assessment, response, and monitoring/control. Response strategies should address both threats and opportunities. Managing risk is important for achieving project objectives on time and on budget while also finding potential benefits.
Enhance your audiences knowledge with this well researched complete deck. Showcase all the important features of the deck with perfect visuals. This deck comprises of total of thirty one slides with each slide explained in detail. Each template comprises of professional diagrams and layouts. Our professional PowerPoint experts have also included icons, graphs and charts for your convenience. All you have to do is DOWNLOAD the deck. Make changes as per the requirement. Yes, these PPT slides are completely customizable. Edit the colour, text and font size. Add or delete the content from the slide. And leave your audience awestruck with the professionally designed Risk Identification Powerpoint Presentation Slides complete deck.
A new emphasis on enterprise risk management from regulators has heightened awareness among bankers to get educated and adopt these best practices at their institution. In response to this increased focus, the RMA ERM Council developed the ERM framework and associated competencies, which became the foundation for a series of highly practical workbooks for implementing effective ERM.
operations risk management power point presentation.Miyelani Shibambo
Operational risk can result in losses from internal failures or external events. It is classified based on frequency and impact of events. Management typically focuses on low frequency/high impact events and high frequency/low impact events. The Basel Accords define three approaches to operational risk capital requirements: Basic Indicator, Standardized, and Advanced Measurement. The Standardized Approach divides business activities into eight lines and assigns a beta multiplier to each line's gross income. The Advanced Measurement Approach uses banks' internal models to calculate regulatory capital.
Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters.
what is the definition of risk management
risk management services
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risk management for project management
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Implementation of Enterprise Risk Management with ISO 31000 Risk Management S...PECB
The webinar covers:
• The start of any Enterprise Risk Management Program
• The approach to developing a framework that will assist organizations to integrate RM into their enterprise-wide risk management systems
• The relationship between the foundations of the risk management framework and their objectives
Presenter:
This webinar was presented by M. Youssef K, an executive consultant & trainer with several qualifications. He is an accomplished expert with over 10 years’ experience in the field of risk management, project and program management, PRINCE 2, Agile, EVM, business process analysis and design, as well as operational and organizational excellence.
Link of the recorded session published on YouTube: https://youtu.be/9fO-JqENL0I
This document discusses operational risk management. It begins by defining risk management and the types of risks, including operational risk. It then discusses why operational risk management is important, highlighting some significant operational risk events. It describes tools for identifying and monitoring operational risk, such as loss data collection, risk and control self-assessments, and key risk indicators. It also discusses approaches for measuring operational risk capital requirements under Basel II and III, including the basic indicator approach, standardized approach, and advanced measurement approach. Finally, it notes some challenges in measuring operational risk and ways to mitigate and control operational risk exposures.
Operational Risk Management under BASEL eraTreat Risk
Operational risk have always ignored by Banks as they thought Credit and market risks can cause catastrophe. But history of misfortunes taught us different lessons. Controls and internal audit have long been construed as guard till BASEL II dictates forced banks to look with insight. Understand the dimension of ORM in this presentation.
This document discusses risk management. It defines risk as a potential problem that may or may not occur. Risks are characterized by uncertainty and potential loss. Risks are categorized as project risks, technical risks, business risks, known risks, predictable risks, and unpredictable risks. The document outlines the steps of risk management as identifying risks, analyzing their probability and impact, ranking risks, and developing contingency plans for high probability/impact risks. It also describes how a risk table can be used to project risks by listing the risk summary, category, probability, impact, and pointer to the risk management plan.
Operational Risk Management - A Gateway to managing the risk profile of your...Eneni Oduwole
This document provides an overview of operational risk management (ORM). It defines operational risk and ORM, outlines the core principles and framework of ORM. It describes the elements of ORM including people, process, system and external risks. It discusses ORM procedures such as risk and control self-assessment, key risk indicators, and loss incident reporting. It also introduces some common ORM tools and highlights the benefits of implementing ORM such as improved quality, cost savings, stability of earnings and enhanced competitive position.
The document discusses risk management frameworks and processes. It provides:
1) An overview of risk management, including highlighting risks at the project, program, and portfolio levels.
2) A risk management framework involving establishing context, risk identification, analysis, evaluation, and treatment.
3) Details of risk governance, including risk management plans, risk registers, governance documents, and ongoing and discrete risk activities.
This document discusses different types of risk associated with investments including market risk, interest rate risk, inflation risk, business risk, credit risk, and exchange rate risk. It also discusses risk management, which involves identifying, analyzing, and mitigating risks. Key aspects of risk management include using a scientific approach, considering both insurable and uninsurable risks, and focusing on reducing the cost of handling risk. Risk management systems help gather risk information and allow analysis from different perspectives to inform the risk management process.
Every organization needs to adapt to the ever-changing business environment. Sensing this need, we have come up with these content-ready change management PowerPoint presentation slides. These change management PPT templates will help you deal with any kind of an organizational change. Be it with people, goals or processes. The business solutions incorporated here will help you identify the organizational structure, create vision for change, implement strategies, identify resistance and risk, manage cost of change, get feedback and evaluation, and much more. With the help of various change management tools and techniques illustrated in this presentation design, you can achieve the desired business outcomes. This business transition PowerPoint design also covers certain related topics such as change model, transformation strategy, change readiness, change control, project management and business process. By implementing the change control methods mentioned in the presentation, you will be able to have a smooth transition in an organization. So, without waiting much, download our extensively researched change management framework presentation. With our Change Management Presentation slides, understand the need for change and plan to go through it without any hassles.
Risk Management Process Steps PowerPoint Presentation Slides SlideTeam
It covers all the important concepts and has relevant templates which cater to your business needs. This complete deck has PPT slides on Risk Management Process Steps PowerPoint Presentation Slides with well suited graphics and subject driven content. This deck consists of total of fifty four slides. All templates are completely editable for your convenience. You can change the colour, text and font size of these slides. You can add or delete the content as per your requirement. Get access to this professionally designed complete deck presentation by clicking the download button below.
This document provides an agenda and presentation materials for a workshop on strategic risk management. The workshop is organized by MakeITWork Consulting ME and will take place in Ramallah, Palestine. The agenda covers topics such as defining risk, the importance of risk management, enterprise risk management as a factor for organizational success, developing a simple strategy and framework for ERM, and benefits of Basel III recommendations for risk management practices. One session introduces the speaker, Dr. Jorge Vaz Girão, who has over 30 years of experience in program, project, and risk management.
Operational Risk Management Under Basel II & Basel IIIEneni Oduwole
This presentation discusses operational risk under Basel II and III. It provides an overview of the evolution of Basel guidelines and the focus of the Basel II framework on providing capital standards for banks to mitigate financial and operational risks. It defines operational risk and discusses the approaches to estimating capital - basic indicator, standardized, and advanced measurement. The presentation notes some pitfalls of Basel II and the focus of Basel III on increased capital requirements and liquidity standards. It addresses ongoing challenges in operational risk management and potential improvements.
Operational risk can arise from inadequate or failed internal processes, people and systems or from external events. It can be measured using a top-down approach such as the Basic Indicator Approach which calculates capital as 15% of average gross income, or the Standardized Approach which divides activities into business lines each with a factor. A bottom-up approach uses internal loss data but has challenges around position equivalence, completeness, and context dependence. Key risk indicators can also be used to signal potential operational losses.
Risk management is the process of identifying and mitigating risks that may have a positive or negative impact on a project. It includes risk management planning, identification, analysis, response planning, and monitoring and control. Analyzing risks qualitatively and quantitatively helps prioritize them so appropriate responses can be developed, such as avoiding, transferring, mitigating, or accepting risks. Monitoring risks ensures new risks are identified and risk responses remain effective over the project lifecycle. The benefits of effective risk management include more efficient resource use, continuous improvement, fewer failures, and enhanced communication and accountability.
Risk management involves determining the probability and impact of process failures and mitigating risks likely to occur with severe impacts. An acceptable risk is determined by evaluating options and consequences to select the most acceptable one. Risk severity is the probability of an event multiplied by its potential negative impact. Ways to deal with risk include proactive risk management to reduce probabilities and impacts, and reactive crisis management with constrained options. The CAPA system connects to risk management by using risk assessments to prioritize CAPAs and elevate issues. An annual product review examines manufacturing, quality, and post-market records over the previous year to support management decisions.
The document discusses the concept of risk, including defining risk, measuring risk, and the nature of risk. It then categorizes types of risk as personal risks, property risks, liability risks, fidelity risks, and risks due to vehicle ownership. The document also covers risk management, defining it as identifying, analyzing, and controlling risks. It discusses features, objectives, and methods of risk management, including risk identification, scope of managing risk, and organizing a risk management team.
This document discusses operational risk and provides details on its definition, measurement, and management. It defines operational risk as losses resulting from inadequate or failed internal processes, people, and systems or from external events. It describes the Basic Indicator Approach, Standardized Approach, and Advanced Measurement Approach for calculating operational risk capital charges under Basel II. It also outlines the data elements, risk categories, and tools used to measure and manage operational risk.
This document discusses risk and risk management. It defines risk as uncertainty about potential losses and categorizes risks as objective or subjective. It also discusses concepts like chance of loss, perils, hazards, and different types of risks like fundamental risk, particular risk, and enterprise risk. The objectives and steps of the risk management process are also outlined, including identifying exposures, analyzing frequency and severity of losses, selecting risk control or financing techniques, and implementing and monitoring the risk management program.
This document outlines a presentation on risk management fundamentals given by the Federal Aviation Administration. It introduces the topic of risk management and defines key terms like hazard, risk, risk assessment, and risk control. It explains the importance of identifying hazards and assessing risk using a risk matrix to determine risk levels. Finally, it details the five steps of the risk management process: identify hazards, assess risk, make risk decisions, implement controls, and monitor the effectiveness of controls. The overall goal is to provide a framework for integrating risk management into an organization to make safer decisions.
Operation Risk Management in Banking SectorSanjay Kumbhar
This presentation discusses operational risk management in the banking sector. It covers topics such as categories of operational risk, risk identification and analysis techniques, key risk indicators, and risk mitigation strategies. The presentation is delivered by five students and contains several sections that outline the flow of topics to be presented.
The document discusses operational risk and provides guidance on defining, identifying, measuring, monitoring, controlling, and mitigating operational risk according to the Basel Committee on Banking Supervision. It addresses issues with operational risk loss data and outlines principles for developing an appropriate operational risk management environment, process, and framework. The document also examines challenges with using internal and external loss data for quantifying operational risk capital requirements.
The document discusses the purpose and goals of risk management in healthcare organizations. It aims to enhance patient safety and minimize financial losses through risk identification, evaluation and prevention. It also helps ensure compliance with regulatory standards. An effective risk management program has a formal structure, integrates risk and quality departments, and guarantees confidential reporting to improve safety and reduce future incidents.
The 2nd seminar of Friends4Growth in Ho Chi Minh city with Prof. Enoch Ch'ng from SMU - Singapore Management University.
Friends4Growth
Together We Grow
--------------------------------------------------
Friends4Growth is a group of young professionals, who share a common passion to learn and grow more in their career through formal and informal educational opportunities. The group was founded by Vietnamese national Le Tran, a Wharton MBA Class of 2009.
The Friends4Growth mission is as follows:
- Be a place for young professionals to exchange and enhance knowledge
- Bring educational opportunities to members by providing access to well-known professors, business leaders and industry experts
- Provide information of universities around the world to members with intention to study abroad
- Share experience in studying, job search, working and living outside Vietnam
To achieve its mission, the group organizes various activities on a monthly basis to its members, such as:
- Seminars on various industry topics, with a sponsorship of the Singapore Management University.
- Coffee chats with experienced professionals from more developed economies
- Q&A sessions covering overseas life and work from seasoned experts
Website: www.friends4growth.com
Join us at: http://facebook.com/friends4growth and http://vn.linkedin.com/in/friends4growth
If you have any inquiry, please contact us at info@friends4growth.com
Operational risk management and measurementRahmat Mulyana
a short description in mixed English and Bahasa Indonesia on Operational Risk Management and Measurement, in particular value at risk calculation using Monte carlo Simulation. Another method using EVT (Extree Value Theory) will be delivered shortly. regards
This document discusses business continuity, which provides strategies and processes to help ensure a company can survive disruptive events like disasters. It involves disaster recovery, backups, and succession planning. Business continuity determines how a company will continue operating if facilities are damaged until normal operations resume. The document provides statistics on data loss and outlines business continuity management structures, implementation processes, and requirements like recovery time objectives. It also discusses components, considerations, and maintaining business continuity over time.
Manajemen risiko (ppt) operational riskRahman Akbar
The document discusses operational risk and its management. It defines operational risk as losses from failed internal processes, people or systems, or external events. It identifies various risk events and their potential impacts. It also outlines the operational risk management process of identifying risks and their root causes. Further, it compares top-down and bottom-up approaches to assessing operational risk and describes the loss distribution approach actuarial model. Finally, it discusses methods for mitigating operational risk through internal and external controls.
BCM is a structured approach that helps organizations continue operating during disruptions by ensuring critical operations can still function. An effective BCM framework includes understanding the organization, conducting risk assessments, developing response plans, and testing plans through exercises. Regularly reviewing and updating plans is important to account for organizational changes. Implementing a strong BCM program provides benefits like reduced financial impacts, protected reputation, and compliance.
This document discusses how healthcare providers can prepare for and respond to audits from regulatory agencies. It recommends developing compliance programs, conducting internal audits, and preparing documentation in response to audits. It also outlines the five-level Medicare appeals process and tips for appealing unfavorable audit results, such as establishing a multi-disciplinary appeals team and reviewing every denied claim. The Fox Group is a healthcare consulting firm that can help providers comply with audit requirements and minimize future exposure through risk-based coding audits and training programs.
An external audit assesses an entity's internal controls, procedures, governance and financial reporting. It is performed by independent external auditors and provides assurance to financial statement users. The audit ensures the financial statements accurately reflect the entity's financial position and comply with relevant standards and regulations. External auditors issue a report representing their opinion on whether the financial statements are fairly and accurately presented.
This document summarizes various risks, issues, actions, and decisions. It identifies 4 risks including an RCA on a work shadow delay, rescheduling a work shadow, aging open RAID items, and THHN profiles being shared. It also notes medium severity items account for 58% of total open RAID items and lists the top 4 RAID items including a delay in access availability. Responses to issues involve complying with defined actions to address delays and quality impacts.
This document discusses risk management in the banking sector. It identifies four main types of risks that banks face: operational risk, credit risk, market risk, and regulatory risk. For each risk, it provides examples of the specific risks involved. It also discusses how risk management in banks has evolved from a focus on risk reduction to treating risk as an inherent part of the business that must be monitored. Regulatory responses aimed at improving risk management in the financial industry are also summarized.
Planning processes can lead to higher productivity, higher accuracy, and faster turnaround for essential business tasks. This lesson will dig into process planning - what it is, why we should do it, and the steps to follow to plan or improve a process.
How does Operational Risk Management fit into an organization's Strategic Planning? This presentation attempts to provide a functional and implementable response.
This document discusses enterprise risk management (ERM) frameworks and best practices. It provides an overview of why ERM is important for organizations to deal with potential future uncertainties and support value creation. The document outlines the key components of the COSO ERM framework, including establishing risk management objectives, identifying risks, assessing risks, responding to risks, control activities, information/communication, and monitoring. It also discusses how to implement an effective ERM process through organizational design, risk assessments, determining risk appetite, identifying risk responses, and communication/oversight.
The document discusses various aspects of IT risk assessment including identifying risks, assessing risk levels, examples of risk events, threat modeling, developing risk scenarios, risk analysis methodologies, and third party risk management. Some key points include:
- IT risk assessment involves determining the probability and impact of identified risks. Common risk events include regulatory changes, loss of key personnel, and ransomware attacks.
- Threat modeling is used to identify internal and external threats and design adequate controls. Vulnerabilities represent weaknesses that could be exploited by threats.
- Risk scenarios help estimate the frequency and impact of risks and imagine what could go wrong. They are developed using top-down and bottom-up approaches.
- Risk
This document summarizes COSO's Enterprise Risk Management - Integrated Framework. It defines ERM as a process run by an organization's board and management to identify potential events, manage risk within the organization's risk appetite, and provide assurance around achieving objectives. The framework identifies 8 components of ERM - internal environment, objective setting, event identification, risk assessment, risk response, control activities, information & communication, and monitoring. It describes how organizations can implement ERM through risk assessments, determining risk appetite, identifying responses, and ongoing monitoring and oversight. Internal auditors can help by reviewing controls and risk processes and ensuring resources target key risk areas.
This document summarizes COSO's Enterprise Risk Management - Integrated Framework. It defines ERM as a process run by an organization's board and management to identify potential events, manage risk within the organization's risk appetite, and provide assurance around achieving objectives. The framework identifies 8 components of ERM - internal environment, objective setting, event identification, risk assessment, risk response, control activities, information & communication, and monitoring. It describes how organizations can implement ERM through risk assessments, determining risk appetite, identifying responses, and ongoing monitoring and oversight. Internal auditors can help by reviewing controls and risk processes and ensuring resources target key risk areas.
This document summarizes COSO's Enterprise Risk Management - Integrated Framework. It defines ERM as a process run by an organization's board and management to identify potential events, manage risk within the organization's risk appetite, and provide assurance around achieving objectives. The framework identifies 8 components of ERM - internal environment, objective setting, event identification, risk assessment, risk response, control activities, information & communication, and monitoring. It describes how organizations can implement ERM through risk assessments, determining risk appetite, identifying responses, and ongoing monitoring and oversight. Internal auditors can help by reviewing controls and risk processes and ensuring resources target key risk areas.
This document provides an overview of operational risk management frameworks and control self-assessment processes. It defines risk management and outlines common risk management frameworks. It then describes a control self-assessment framework that includes setting objectives, assessing risks and controls, analyzing results, and monitoring risks on an ongoing basis. The framework is intended to help managers assess risks and controls in a transparent way and provide regular reporting to senior management.
This document discusses COSO's Enterprise Risk Management (ERM) framework. It defines ERM and explains its importance in supporting value creation. The framework consists of 8 components - internal environment, objective setting, event identification, risk assessment, risk response, control activities, information & communication, and monitoring. It emphasizes taking a portfolio view of risk and considering risks at the entity, division, and business unit levels. The roles of management, the board, risk officers, and internal auditors in ERM are also outlined.
Mastering Information Technology Risk ManagementGoutama Bachtiar
This is the presentation slide as part of the courseware utilized when delivering Information Technology Risk Management training - workshop on May 2013.
This document discusses COSO's Enterprise Risk Management framework. It defines ERM as a process designed to identify potential events that may affect an entity and manage risks within its risk appetite. The framework consists of 8 components: internal environment, objective setting, event identification, risk assessment, risk response, control activities, information & communication, and monitoring. It is designed to help an organization achieve its objectives and create value for stakeholders. Internal auditors play an important role in monitoring and evaluating the effectiveness of an organization's ERM.
The document discusses the risk management process, including key drivers, risk analysis, risk identification by source, and risk assessment. It describes the main steps and considerations for risk analysis, including quantitative and qualitative approaches. It also outlines some common sources to identify risks, such as risk registers, audit reports, impact analyses, reviews, and analytical tools like SWOT and PESTLE. Effective risk management requires identifying risks from multiple sources, analyzing their likelihood and potential impact, and ongoing monitoring and assessment.
This document defines key concepts in risk management including risk, risk analysis, risk assessment, risk communication, and risk management. It explains that risk management involves identifying potential risks, assessing their likelihood and impact, selecting techniques to address them such as tolerating, treating, transferring or terminating risks, then implementing and continually improving the risk management process using a plan-do-check-act framework. Common risk management strategies are outlined along with limitations of the approach.
Operational risk is the risk of loss from inadequate or failed internal processes, people, and systems or from external events. This document provides a summary of operational risk, including:
1) It defines operational risk and provides examples such as business interruption, errors by employees, product failure, and IT systems failure.
2) Risks can be identified through various techniques like workshops and audits to assess processes. They are then assessed for impact and likelihood.
3) Operational risks are managed through techniques like risk acceptance, risk sharing, risk reduction, and risk avoidance such as purchasing insurance. Ongoing monitoring and review is important.
The document summarizes an internal auditor's workshop on using audits as a risk management tool. It includes the following:
- An overview of the risk management process including identifying risks, assessing and measuring risks, responding to risks, designing and testing controls, and continuously improving risk management.
- The three lines of defense in risk management - operational management owns risk management as the first line, risk management and compliance functions provide oversight as the second line, and internal audit provides independent assurance as the third line.
- Key aspects of the risk management process including governance, people, processes, and technology as well as identifying risks, assessing risks, developing risk response strategies, and monitoring risks.
This document discusses the key steps in a risk management process:
1. Identifying risks through risk statements that define the root cause, consequence, and downstream impact.
2. Analyzing and prioritizing risks by estimating their probability, impact, and exposure.
3. Planning risk actions by developing strategies to reduce exposure for high-priority risks.
4. Tracking risks and reporting changes in their status to ensure risk plans stay up-to-date.
5. Controlling risks by monitoring plans and taking corrective actions in response to triggering events.
The document defines risk and issue, outlines the risk lifecycle and management cycle, and provides details on risk identification, analysis, assessment, and management. Key points include:
- A risk is a potential future event that could negatively impact objectives, while an issue is a current problem.
- The risk management cycle includes identifying risks, assessing them, selecting strategies, implementing controls, and monitoring/evaluating.
- Risk identification involves knowing the organization's assets and sources of risk. Risk analysis assesses the likelihood and impact of risks.
The document outlines the 7 steps of the risk management process:
1. Communicate and consult to identify stakeholders in the risk assessment.
2. Establish the context by defining internal/external factors and risk criteria.
3. Identify risks through retrospective analysis of past issues and prospective analysis of future risks.
4. Analyze risks by evaluating their consequences and likelihood using qualitative or quantitative methods.
5. Evaluate risks by comparing them to the established risk criteria to determine if treatment is needed.
6. Treat risks by selecting options to reduce negative risks or enhance positive ones.
7. Monitor and review risks on an ongoing basis to ensure the risk management process remains effective.
This document outlines the steps of the risk management process. It begins by defining risk management as consisting of steps that enable continual improvement in decision making. It then details the 7 steps as: 1) Communicate and consult, 2) Establish context, 3) Identify risks, 4) Analyze risks, 5) Evaluate risks, 6) Treat risks, 7) Monitor and review. Each step is then explained in detail with tips provided. The focus is on establishing the proper context, identifying both past and potential future risks, analyzing the risks through qualitative or other methods, and continually monitoring and improving the process.
The document outlines the 7 steps of the risk management process:
1. Communicate and consult to identify risks and those involved in managing them.
2. Establish the context by defining internal/external factors and risk criteria.
3. Identify risks through retrospective analysis of past issues and prospective analysis of future threats.
4. Analyze risks by assessing their likelihood and consequences both qualitatively and quantitatively.
5. Evaluate risks by comparing them to the established criteria to determine if treatment is needed.
6. Treat risks by developing options to reduce negative risks to an acceptable level.
7. Monitor and review risks on an ongoing basis to ensure the risk management process remains effective.
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MIT’s Digital Transformation Framework
Gartner’s Digital Transformation Framework
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Risk management ppt 111p (training module)
1. Introduction
Instructor:
Sadia Razzaq
3 days taining course on ERP-EBS Modules along with
core competencies for zonal managers (OPS/ADMN)
Topic of the day:
Operations Risk Management
(Concept, Measurement and management
techniques)
4. A Brief History of Operational Risk Management
• Taking the opportunity out of risk and taking the risk out of
opportunity is natural. However, making that process explicit,
systematic and logical – risk management – only really began
with the coming of probability mathematics
• Since then areas and industries lending themselves to
quantitative analysis have devised increasingly sophisticated
mathematics and methodologies to determine the likelihood,
impact and exposure to risks. Where data is available the
results have been largely successful, but by definition the
outcome of risk management is uncertain
• Further uncertainty arises in the area of operational risk due
to the value of economic intangibles such as goodwill, and the
volatility of interrelationships amongst the factors
determining each aspect of risk and opportunity.
5. Cont….
• Given these features, risk management remains more of an
art than a science, despite the growing body of literature
classified as risk management
• In the United States the loss of the Challenger space vehicle
and collapse of thrifts had an impact; in New Zealand it was
the collapse of the scenic Cave Creek viewing platform. While
these events were sufficiently shocking at a national level to
promote the advent of recognized operational risk
management processes, at an organization level
• With the rising awareness and recognition of operational risk
management as such, various generic standards were
published. These have been successful in providing a
reference against which individual organizations can compare
their own methodologies
• It is increasingly recognized that a systematic evaluation
process will improve risk management approach
6. Cont….
• The process of developing, implementing and supervising
operational risk management in banks is evolving and
incomplete, however, its institutionalization had been arise as a
category of regulatory and managerial attention
• Basel 2 make the connections between the management of
operational risk and good corporate governance in such a way as
to position old risks in new space
• The term ‘operational risk’ has been coined in 1991
• Later Barings and other scandals such as Daiwa, construct the
history of operational risk management
• The emerging risk management agenda is necessarily grafted on to
the existing technical agendas of different operational groups
• Operational risk and the Basel 2 reforms create a new competitive
space for various control agents inside financial organizations
, who re-launch what they do in the name of operational risk
management
7. Definitions
• ‘Operational risk is being the risk of losses resulting
from inadequate or failed processes, people and
systems or from external events’
• ‘Operational risk is the risk that deficiencies in
information system or internal controls will result in
unexpected loss, the risk is associated with human
error, systems failure and inadequate procedures or
controls’
• Operational risk is the risk of adverse impact to
business as a consequence of conducting it in an
improper or inadequate manner and may result
from external factors”
8. Key Terminologies
• Risk appetite: The point of balance between risk and reward at which a
decision maker feels most comfortable.
• Exposure (residual risk): Risks remaining after risk treatments have been
applied.
• Inherent Risk: Risks intrinsic to a given situation prior to the application of
any alleviating or aggravating treatment.
• Likelihood: A value assigned to the probability or frequency with which a
potential event is estimated to occur.
• Opportunity: A potential event deemed to have a positive effect on an
organization.
• Risk: A potential event deemed to have an adverse effect on an
organization.
• Risk Assessment: A systematic process of analysis and evaluation of risks
and opportunities.
• Risk Management: The systematic and conscious
understanding, organization and treatment of risks and opportunities.
• Uncertainty: Context in which an event occurs with some probability, the
distribution of which is unknown
9. Cont….
• Operational Risk Management: The systematic assessment
and management of the trade-offs made between risk and
opportunity to run an efficient and effective organization.
• System risk: The risk that a failure of a single institution could
create failures elsewhere in the system because of the
interconnectedness of transactions and institutions
• Operational Risk Event (ORE) : is defined as a failure of
internal processes, people or systems, or a result of external
events.
• Treatment: Conscious action in relation to a risk or
opportunity:
Reject (walk away).
Transfer (split the risk with another party).
Accept (take the risks & opportunities as they come).
Optimize (reconfigure strategy, operations, culture, etc to
maximize opportunity and/or minimize risk).
10. Categories
• Operational risk can be captured in five major
categories:
Organization
Policy/Process
Technology
Human
External
The 5 suggested categories are major and they
present a valid base for solving problems for
management.
11. Cont….
• Organization: risks arising from such issues as change
management, project management, corporate culture and
communication, responsibilities, allocation and business
continuity planning.
• Policy and Process: risks arising from weaknesses in
processes such as settlement and payment, non-compliance
with internal policies or external regulation or failures in
products or client dealings.
• Technology: risks arising from defective hard- or
software, failures in other technology such as networks or
telecommunications, as well as breaches in IT security.
• Human: risks arising from failure of
employees, employer, conflict of interest or from other
internal fraudulent behavior.
• External: risks arising from fraud or litigation by parties
external to the firm, as well as lack of physical security for the
institution and its representatives.
13. Cont…
• Reputation risk: The aggregation of the outcome of all
risks plus other internal and external factors.
Reputation is the outcome of the mix of doing the right
thing and doing things right over an extended period.
• Strategy risk: It deals with the existing base of a bank
and its options, based on a what-if analysis. Strategy is
doing the right thing at the right time. It is not so much
the strategy, but implementation which in turn is
Operational risk
• Operational Risk: Defined as the risk of loss or
reputational damage resulting from inadequate or
failed internal processes, people and systems or from
external events.
14. Dimensions of Risk Management
Risk management can add value and represent a valid business
case in two dimensions:
• Control: Independent risk assessment, compliance, business
continuity planning, supervisory
requirements, limits, progress
reporting, escalation, corrections, etc. it covers the following:
avoiding accidents, catching non-compliance and illegal
actions, complying with rules and regulations, complying with
usual management needs.
• Shareholder value creation: efficiency, correct risk evaluation
and pricing, duplicate control avoidance, rational economic
capital allocation, reduction of regulatory capital, product
enhancements, competitive strategic advantage, improved
reputation, etc. it adds a further stage which treats
Operational Risk more like a real business. Operational Risk
management also gets close to quality
management, efficiency management and the concept of
opportunity cost.
16. • Management of operations has always used some
sort of tools to identify, assess, control and manage
Operational Risk in its day-to-day specific area of
activity. With the increased awareness of senior
management for risks in general and for
Operational Risk in particular, these tools have
received closer attention.
• No one tool on its own is sufficient; each has its
limitations. "Synchronization" of the tools combined
with previously discussed, more high level
approaches of general management - including
audits and compliance measures - is the issue. Such
an approach leads to integrated risk management.
17. Practical instruments and tools
1. Control and Risk Self-Assessment (CRSA) is a work team-based technique to
help managers identify and measure Operational Risk through estimates
based on the consensus opinion of a group of knowledgeable managers and
staff. The ultimate objective of this process is to foster the
identification, assessment and mitigation of Operational Risk.
• Management must clarify the relationship between the organization's
primary corporate objectives and the specific business line objectives for
each participating unit. These objectives can include diverse areas, as well
as diverse practical applications for every department and every employee
function.
• The objectives are analyzed in terms of:
Threats - events that could prevent the achievement of an objective
Controls - activities that provide additional assurance that objectives are met
Agreed residual risk - the real or possible events or situations where a
business/quality objective is not being met or may not be met given the
controls in use/place.
The information on threats, controls and risks is captured for each business
objective. The information is then documented, summarized and reported
to senior management. Due to the dynamic nature of a firm's risk
profile, CRSA findings should periodically be updated.
18. Cont…
2. Impact & Frequency Scorecard: In particular
Operational Risk events that are identified as having
potentially significant impact can be isolated for
further analysis which may include frequency
estimator and investigative study. Based on the fact
findings from these analytical tools, appropriate
management response can then be deployed.
Following examples will explain these tools
21. Cont….
3. Risk and Process Mapping: Operational Risk mapping
is based on self-assessment / perception survey and is a
qualitative technique to identify, categorize, analyze
and assign:
• Specific risks against a standard template
• Controls or other tactics to manage identified risks
• Residual risks and desired levels of residual risks
• Responsibility for management of identified risks
Process or activity mapping is a technique employed to
describe business processes in a clear, visible way. In
the context of OpRisk, it is designed to provide a
reflection of the diverse activities that take place within
the departments, identifying risk drivers and controls.
23. Cont…
4. Operational Risk Dashboard
Operational Risk Dashboard is intended to provide
senior management with a simple overview of
operational risk levels and directional trends at the
highest reporting aggregation level per business
unit. The dashboard works on the traffic light
principle, grading category-aggregated risk per BU
by colour. Risk indicators aggregated to categories
as BU specific composites or via group-wide sub
categories are evaluated and given a weighting
which contributes to the overall Operational Risk
category risk grade.
25. Cont….
5. Loss Event Database:
A loss event database captures and accumulates
individual loss events across business units and
risk types. A loss event database is the only tool
which measures, quantifies and provides
financial Operational Risk data. An established
and complete database can potentially be used
for modeling purposes and be applied to external
loss events.
26. Models
1. Factor-derived Models:
These models apply causal factors to build a
prediction of the LEVEL of RISK. They tend to
produce a figure for the relative future value of the
causal factors on Operational Risk, but not
necessarily of the operational LOSS amount. They
are also considered to be only partially
representative of Operational Risk root causes.
For example, they would use a combination of error
rates, failed reconciliations, employee training
expenditure, staff turnover, indicators of the IT
system complexity, indicators for the quality of
governance, etc. to project a level of OpRisk.
27. Cont…
2. Indicator based Models:
An indicator-based quantification as a possible
method for the quantification of Operational Risk
and the corresponding regulatory capital allocation.
The level of Operational Risk is identified by a
multiple of a simple observable indicator or a
combination thereof. Suggested indicators include:
gross revenues, fee income, operating
costs, managed assets or total assets adjusted for
off-balance sheet exposures.
28. Cont…
3. Statistical / Actuarial / Simulation-based Models
These models use actual loss data to construct representations of
operational loss frequencies and severity in the form of statistical
probability distributions. To do this, they require many data points
and have to rely on the existence of complete Operational Risk
databases.
Simulation-based quantification models are very popular in the
literature on Operational Risk, particularly the actuarial inspired
Monte Carlo simulation technique.44 The prime reason for this is
that they allow filling the data gap prevailing in Operational Risk
for low probability events.
The flaw is that the present state of Operational Risk data does not
allow for any backtesting of the correctness of the generated
distribution. In addition, slight changes in the environment, due to
the high context dependency of Operational Risk, will have a
significant impact on the generated distribution. These would
require reviewing the entire underlying simulation setting.
29. Cont…
4. Loss-Scenario / Qualitative Assessment Models
These models produce a subjective loss estimate for a given time
horizon (say one year) and confidence level (say 99%), based on
the experience and expertise of key managers. Weaker assessment
forms could just require ranking of the Operational Risk level for
each elements of a risk map or checklist.
Qualitative assessment models have been put forward, as they are
particularly well suited for tackling both the frequent in
observability of Operational Risk and its high context dependency.
A purely qualitative assessment can also be turned into a
quantification method.
Such methods have the advantage of enhancing transparency of the
CHANGE of Operational Risk. They also allow a proactive
management of the level of Operational Risk. However, as they
rely on the subjective judgment of experts, they are only
appropriate for a crude quantification of the Operational Risk
economic capital level and Operationa lRisk capital allocation.
30. The data challenge
• Data availability is a precondition. Activities only turn into data, if
they are recorded in a form which can be retrieved at a later stage.
• The operational risk data should be available in ‘frequency’ and
‘level of detail’
• Operational Risk data should systematically collected for all
departments, business lines or clusters
• Many risk areas just cannot be measured. They require judgment.
Accordingly, two types of data, qualitative data and quantitative
data must be distinguished.
• it is extremely important that the information to be captured in
the data is clearly defined, in terms of content, feature, unit. This
is a precondition for standardization and tracking possible failures
of reporting, formats, etc.
• Structured data is a key rule to success: discipline is required in
allocating tags to Operational Risk data such as definition, time-
, source-, organization-, frequency - references, etc. to be able to
make use of them.
31. Cont…
• it possible for data points to be combined in a reliable and
credible database system and turn them into real
information.
• Data quality and its consistency over time is the issue.
• Consistency of statistics is core
• Relevance has to be ensured. Times do change. New
environments, new products are put in place. Constant
surveys and checks of the type of data being used must be
performed to avoid "white noise" or unrealistic indicators.
• Pollution of databases happens. Polluted and fake data
produce not only incorrect or incomplete but also misleading
indicators.
• Without maintenance, a database engine cannot run. Data
must consistently be reported, loaded and updated.
32. Quantification of operational risks
In this exercise, we will look whether it is possible to measure
each element of Operational Risk separately or whether only
a qualitative assessment can be performed.
Quantification / measurement generally involves looking at four
aspects of a phenomenon within an organization:
• Its size, severity or intensity
• Its frequency
• Its context dependency: different in different situations
• Its interaction - contagion/correlation - with other events
Size describes the observed extent of a move.
Frequency describes the number of times a move of a given size
occurs within say a given time period or a given organizational
unit.
Context dependency describes whether the move size is
different in different situations or not.
33. Cont….
The lower the observability of moves in terms of size and
frequency and the higher their context dependency and
interaction, the more difficult it will be to measure the
Operational Risk sub-category. In such cases a qualitative
assessment offers the best alternative for quantification.
"Technology" and "external risks" should allow for a database
based quantification, similar to the one performed for market
or credit risk.
"Organization, policy and process", however, only permit a
quantification based on qualitative assessments.
Given the challenge that only relatively few elements in
Operational Risk are credibly measurable and quantifiable, it
is essential on the management level not to make the
measurable important, but the important measurable.
34. Software Solution
Modern IT-systems lead to New Processes. The pressure
from everywhere to invest continuously and
dramatically - including in the interest of risk reduction
- in modern processes is immense.
Integrated IT networks are central, especially for a global
institution. Internet related technologies enable much
higher and more sophisticated levels of co-
ordination, globality, efficiency and flexibility.
However, they open the door for chaos and risks if they
are not consistent, structured, harmonized and stable
over time.
The new technologies lead to unique opportunities to
modify and/or overhaul business processes as to
workflow, service delivery and risk reduction
35. Cont….
• Check Point Risk Management Software
It is a software solution that allows efficient operational risk management in
order to improve business processes and performance as well as simplifying
regulatory compliance.
Features:
• Business Unit documentation
• Process documentation and flowcharting
• Risk analysis based on impact / likelihood assessment
• Quantitative analysis using frequency and severity using Monte Carlo
simulations
• Control identification and testing
• Residual risk auto-calculation
• Document and manage incidents / losses
• Action plans and tasks
• Automated alerts
• User-definable reports
• Interactive and drill-down dynamic dashboards
• Access and data control based on permissions
36. Management techniques
Principles of Operational Risk
Management
Stages of Operational Risk
Management
Organizational models for
managing risks
Frameworks for Operational Risk
Management
Internal Control
37. Principles of Operational Risk Management
• There are 12 Golden Rules in Risk Management. They are the
result of observations and adjustments over the years and
apply to Operational Risk aspects as well.
1. Risk is uncertainty about future results.
2. The 6 S's for the systematic mental discipline of an
organization: the logical sequence. Strategy structure
system systems safety speed
3. Clear structure, allocation of responsibility and
accountability and discipline are basic preconditions.
4. Rigorous measures in case of non-compliance/breaches.
5. Completeness, integrity and relevance of
data/systems/information as a basis.
6. Risk management is a tenacious process not a program.
38. Cont…
7. Risk management is part art, part science.
8. Models are always only part of an overall risk management
approach and must include common sense.
9. Complexity is the enemy of speed and responsiveness: try
hard for simplicity.
10. Self-management and leadership with regard to a culture of
open communication based on "experience" and know-how
are increasingly challenging: Ban knowledge-hoarders and
turn knowledge-givers into heroes as part of
evaluation/incentive process.
11. Responsible control/compliance/risk culture is as important
as the most sophisticated quantification.
12. Successful risk management is primarily the result of the
capacity, aptitude and attitude of the people involved: people
shape the culture, reputation and brand equity.
40. Cont…
Implementing Operational Risk management implies
the progression through the following four stages
Meridien Research approximates the lead time for
Stage 1 to Stage 4 with a minimum of 2 - 3 years,
depending on the complexity and the size of an
organization. The research indicates that most of
the Top 500 financial institutions worldwide are still
in stage 1 and 2. A handful has attained Stages 3
and 4;
41. Organizational models for managing risks
A survey has identified 3 generic organizational
models for Operational Risk management:
• __A Head Office Operational Risk function
• __A dedicated but decentralized support
• __Internal Audit playing a lead role in Operational
Risk management.
42. Cont…
• Audit driven Operational Risk Management
It is self-evident that auditing and controlling activities are not
reporting to those who are audited
Internal and external audits play a very relevant role, especially
in the Operational Risk arena. It is true that many
conventional audits are more control-oriented or
concentrating on symptoms. However, forward looking and
diligent audit reports are an excellent base for operational
improvements and reduction or elimination of Operational
Risk: From ex-post assessments to ex-ante improvements.
The audit driven approach is the most pragmatic and readily
implementable approach in Operational Risk management. As
important as the audit reports themselves are the
corresponding follow-ups and corrective actions by those
concerned.
43. Cont…
There is no commonly accepted benchmark or model as to the
methodology of managing Operational Risk. As to be expected in the
art of management, there are arguments for both top-down and
bottom-up approaches in Operational Risk management.
44. Frameworks for Operational Risk Management
A common framework for Operational Risk
management for banks which has emerged recently
includes integrated processes, tools and mitigation
strategies. This framework has 6 components
45. Internal control
Three main objectives and roles of the internal control
framework:
• Efficiency and effectiveness of activities
(performance objectives)
• Reliability, completeness and timeliness of financial
and management information (information
objectives)
• Compliance with applicable laws and regulations
(compliance objectives)
46. Cont….
Internal control consists of 5 interrelated elements:
• Management oversight and the control culture
• Risk recognition and assessment
• Control activities and segregation of duties
• Information and communication
• Monitoring activities and correcting deficiencies
An appropriate control and compliance culture is part
of the risk culture. This "cultural aspect“ needs
close and continued attention by senior
management. "Culture" is qualitative. It cannot be
quantified or modeled.
47. Cont…
Operational Risk Control: 12 General Rules as a Check List
1. Have a control environment and a compliance culture
which accepts internal supervision
2. Regulators' standards are continuously being raised
3. Map regulatory requirements directly to compliance
control.
4. Organize the activities so that they can be controlled
5. Construct procedures relevant for the concrete activity
6. Document the procedures and maintain the relevant
documents
7. Train management and staff
8. Special attention for control procedures
9. Compliance plays an increasingly core role for OpRisk
control
48. Cont….
10. E-commerce presents a new control/compliance challenge
11. Supervisory board and senior management have an
increasing responsibility for controls and compliance: from
back to board room
• 12. Procedures should ideally have the following
characteristics:
Single document as to rules and requirements
Structured along the activity flow
Comprehensive
Clear: so someone else can pick it up; see staff turnover, role of
temps and
Consultants
Instructing: what is to be done in case of......
Teachable: so it can be used as a training aid
Implementable: use simple check lists
Auditable
49. The End
“Our lives improve only when we take chances- and
most difficult risk we can take is to be honest with
ourselves”
Walter Anderson