Reflections on OpRisk Management
First published:
ISBN: 9781782723493
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What Brexit Teaches OpRisk
What Brexit Teaches OpRisk
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
Like others, my main emotion was one of incredulity on the morning of June 24. The result of the UK’s referendum on membership of the European Union was a surprise for most and terrible news for many. In common with The Economist, I believe there is “much to lament” over this outcome, as well as the whole process that led to it. Besides the astonishment and political storm we are still very much feeling today, Brexit has taught me three lessons in risk management that I would like to share.
RECEPTIVENESS: DON’T RULE OUT THE UNLIKELY
I never thought Brexit would happen. I trusted the bookies, distrusted the opinion polls and was convinced the old populist arguments for protectionism and curbs on immigration would seduce only a minority. I wasn’t alone in being wrong, but I was wrong. I was so convinced of a ‘remain’ vote that I didn’t prepare for it.
One of the companies I work with, a French financial firm, felt similarly. Its risk management department prepared nothing except a vague internal note on Brexit – and only then because it was encouraged to do so by the European Banking Authority. On the morning of June 24 it appeared unprepared, with no contingent communication
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