Many of the usual controls had to be relaxed to enable working from home (WFH), to rightly and understandably allow for continuity of business. Risk teams continue to focus on providing a transparent picture of weakened controls and the resulting areas of increased risks. Organisations that prioritise and explore the use of innovative technology and data analytics for more insightful risk management are better positioned to provide meaningful inputs enabling senior management and boards to take right decisions. Making sense of it is frequently a difficult and manual task, performed by Operational risk team comparing outputs from individual tools to create a story. There is a large dependency on the firm’s IT capabilities, and Basel committee 2020 progress report notes that while firms had clearly made improvements, there is ‘still much work to do in this area.’ Operational risk in particular sits on the mountains of exceptionally valuable data. Risk data in general remains a challenge for financial services industry which faces continued focus on data quality following the Basel committee’s publication of principles on risk data aggregation and reporting (by now well-known and studied BCBS239). Even in case of mature and well-established frameworks, new factors such as Operational resilience lead to necessary deliberations on how to integrate Operational risk and Operational resilience effectively, avoiding parallel frameworks and governance processes.įocus on data and use of data analytics has moved up the priority list as compared to previous years. The journey of enhancing the tools is not surprising. Linking risk management to what matters the most - strategy and business objectives (let’s examine the risks that will prevent you from achieving your own objectives) is key to achieving embeddedness.Ĭontinuous enhancement of frameworks and tools Embedding risk management across the organisation and using the tools for better decision making is essentially, about value proposition – are Operational risk tools enabling the business to do their job better? Or adding an unnecessary administrative burden? ![]() Pandemic or not, increasing ownership and accountability in the first line still appears at the top of the priority list. What’s on your agenda for 2021? Best practice Operational Risk forum comprised of practitioners from over 50 international financial services firms of different size and nature discussed and ranked key priorities for this year (graph above).
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