Risk 2002 USA: Deutsche’s Kühborth says op risk is about managing people

Deutsche Bank managing director for operational risk, Gerd Kühborth, told delegates at Risk magazine’s Risk 2002 USA conference late yesterday that effective operational risk boiled down to sound people management.

“Operational risk is all about people, processes and systems, but it really comes down to the people,” said Kühborth. “Managing op risk effectively is about managing your people effectively.”Kühborth opened his ‘Building, Implementing and Validating an Efficient Internal Operational Loss Database’ presentation by outlining the challenges facing financial institutions in creating effective op risk databases.

He cited internal and external data volumes and inconsistencies between institutions in their op risk definitions as the primary challenges. “Op risk is such a broad issue that there is hardly a common definition available yet,” he said.

According to Kühborth, the issue of what to do with an op risk database once it has been established plays a major role in effective op risk management. The answer, he said, is proactive risk management. “Banks must use the collected data and resulting measures for risk reporting, management reporting, internal capital allocation and risk analysis,” said Kühborth. “Institutions that do not fully integrate an internal measurement methodology into their day-to-day activities and major business decisions cannot qualify for this approach,” he added.