Reflections on OpRisk Management
First published:
ISBN: 9781782723493
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Risk Appetite and Framework
Risk Appetite and Framework
Introduction
Operational Risk in Four Letters
An Invisible Framework
Small is Beautiful in OpRisk Management
The Business Value of ORM
How to Minimise ‘People Risk’
The Missing Piece
Risk Appetite and Framework
From Russian Roulette to Overcautious Decision-making
The Importance of Preventive KRIs
How to Build Preventive Key Risk Indicators
Unlocking KRIs
Six Steps for Preventive KRIs
Have Your Cake and Eat It
Conduct, Not ‘Conduct Risk’
How to Manage Incentives
Is Reputation Risk Overstated?
What Regulators Want
Conduct & Culture
OpRisk Takes Forward Steps at OpRisk Europe 2014
Modern Scenario Analysis
The Rogue’s Path
Rogue Trading No Training: The Connections
What Brexit Teaches OpRisk
OpRisk Survey Shows the Insidious Effects of Political Risk
Discarding the AMA Could Become a Source of OpRisk
UCL Research Shows that SMA Reforms Introduces Capital Instability and Discourages Risk Management
Memo to Bank CEOs: Treat OpRisk with More Respect
Don’t Let the SMA Kill OpRisk Modelling
After dedicating their attention successively to incident data collection, governance, scenarios and risk assessments in relatively independent ways, regulators are now focusing on the overall consistency of risk management frameworks, which comprise the methods and tools a firm uses to manage its risks. This article elaborates on a 2007 publication by the erstwhile Financial Services Authority (FSA), which looked at ways to establish an aligned risk management framework.
The FSA’s brief report from an expert group on operational risk appetite summarises opinions and practices of 12 of the largest international financial institutions at the time. Published before the financial crisis, this document constitutes a valuable piece of research that many unfortunately seem to have forgotten. Its most interesting finding is that operational risk appetite is expressed in different forms at different management levels of an organisation (Figure 7.1). These forms of expression also correspond to some of the key elements of an operational risk management framework: capital, risk assessments, key risk indicators and loss data.
WHAT IS RISK APPETITE FOR
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