1. PRMIA/ISDA Operational Risk in E Trading London Wednesday 10th April 2002 G D Woods Managing Director +44 207 678 3633 David.Woods@abnamro.com

2. 10/4/02 G D Woods Property of ABN AMRO Bank N.V.2 E Risks  Aren’t really new  Market & Credit Risk work differently in an e-environment  Operational Risk more discussed

3. 10/4/02 G D Woods Property of ABN AMRO Bank N.V.3 Seven Types of Risk  Inside the Organisation - People - Processes - Technology - Strategy  Outside the Organisation - Business Environment - Legal Systems - Bad Guys (Attribution - Dr Nigel Upton, LBS)

4. 10/4/02 G D Woods Property of ABN AMRO Bank N.V.4 Risks that Change  FX Risk  IR Risk  Liquidity Risk  Reputation Risk  Customer Acquisition Risk  Speed

5. 10/4/02 G D Woods Property of ABN AMRO Bank N.V.5 A Checklist of e-Business Risk Issues Risk SourceCheck Risk Issues (Attribution - Dr Nigel Upton, LBS)

6. 10/4/02 G D Woods Property of ABN AMRO Bank N.V.6 What we’re trying to achieve  Lower error rates  Lower costs  Acceptable Risk/return

7. 10/4/02 G D Woods Property of ABN AMRO Bank N.V.7 And the Potholes...  Mistakes are more costly  Higher 3rd party risks  Risk clustering  Resource availability  Product scalability

8. 10/4/02 G D Woods Property of ABN AMRO Bank N.V.8 Management  Must understand Risks & effect on Business process  Decide on Risks  Accept Risks  Instil culture of Risk awareness