2. Operational Risk Management & Compliance Officers
Where are we now?
Where are we going?

3. Risk Management Framework (example)
Governance
Key indicators
Risk & Control Assessment
Losses
Identify risk and control indicators
Specify risk appetite
Identify risk and owner Assess likelihood and impact
Identify control and owner Assess design and performance
Identify and capture internal and external losses
Analyse loss causes
Action plans
Action plans
Action plans
Modelling
Reporting

4. Risk Management Framework (example)
Governance
Key indicators
Risk & Control Assessment
Losses
Identify risk and control indicators
Specify risk appetite
Identify risk and owner Assess likelihood and impact
Identify control and owner Assess design and performance
Identify and capture internal and external losses
Analyse loss causes
Action plans
Action plans
Action plans
Modelling
Reporting

5. Operational risk governance
A policy: to have or not to have?
Who approves it?
How do you disseminate it?
Committees: Separate RM or ORM?
What role does internal audit play?
And the other control functions?
And the business units?

6. Risk and Control Assessment
What are the main contents of a RCA?
Gross risk (likelihood and impact)
Owners of risks and controls
Controls (design and performance)
Action plans to enhance/add controls

7. RCA (client example)
Risk Factor
Control Factor

8. KRI Dashboard
The dashboard shows key risk indicators you define. The example shows Key performance indicators and key risk indicators (previously set up) and every month you would use this tool to enter the latest figures for these indicators by the chosen business model, our example shows by business line
We have designed our dashboard to have three tabs Year to date, CLICK month and CLICK key risk indicators
You can see immediately the traffic light and trend arrows to alert you to potential problem areas. THE Projects Failing Checkpoints is still green even though the trend is upwards. Because of the threshold settings being used. CLICK
The dashboard tool allows charts in various forms to be viewed/printed to identify the trends
The dashboard can also take aggregate figures from your other systems that manage the other risks to your organisation, e.g. market risk, credit risk so the dashboard tool gives an overview of the total risk picture.

9. Risk Performance (client example)
Current Level
Performance
Appetite
Overall
Risk Event
Impact
Prob.
Actual KRI
Trend
Target KRI
Better / (Worse)
Actions / Summary
Rating*
Major Technology Infrastructure Failure H L
No. of weeks free from severity 1
Failure = 7 +3
10 free weeks during year
No action required
Breach of confidentiality M
Complaints received from Customers re alleged breach = 0
Zero material breaches of VIP customers’ / major corporate customers’ confidentiality
High potential for risk occurrence due to customer / client base
Employee processing error
Error reporting:
5 events
£4,000 loss
+ 2
+1000
No more than 10 errors per quarter.
No single event > £10,000 +5
(8000) .
Internal Fraud
No. of frauds over £10,000 Detected: 7 No. of these frauds committed: 4 Potential Loss: $300,000 Actual Loss: £65,000 +2
+50000
Not more than 1 a month
£10,000 acceptable
(6)
Action required, retrain staff, redesign processes
*Chair of the Committee decides on overall rating for each risk event

10. Risk Management Framework (example)
Governance
Key indicators
Risk & Control Assessment
Losses
Identify risk and control indicators
Specify risk appetite
Identify risk and owner Assess likelihood and impact
Identify control and owner Assess design and performance
Identify and capture internal and external losses
Analyse loss causes
Action plans
Action plans
Action plans
Modelling
Reporting

11. Contact details Tony Blunden, Director, Head of Consulting
Tel: +44 (0)
Fax: +44 (0)
Mob: +44 (0)