Provides a framework for operational risk management
Operational Risk in Banking
Operational risk and IT risk
DESCRIPTION
This product (Unlock the Power of Operational Risk Management) is a 92-slide PPT PowerPoint presentation slide deck (PPTX), which you can download immediately upon purchase.
Unlock the Power of Operational Risk Management: Shaping a Resilient Future
Operational Risk: a lurking adversary in the heart of every business, constantly challenging day-to-day operations with its multifaceted and extensive drivers. From work-related hazards to safeguarding precious customer data, these risks may inadvertently impact vital systems, structures, personnel, processes, or products.
But fret not, for the discipline of operational risk management is here to empower you. Our mission is to uncover, assess, and where possible, mitigate these risks, safeguarding your organization against unforeseen failures, breakdowns, and external turbulence. While we cannot control every twist and turn in the business landscape, we hold the key to understanding the risks and determining the level of residual risk we're willing to embrace.
This isn't just any run-of-the-mill risk management approach – we're about to unveil a game-changer, particularly for the banking industry, where technology-enabled businesses face unique challenges. Our deck unveils an approach tailored for the world of banking, but its impact stretches far beyond. Brace yourself for a transformational journey that will revolutionize risk management practices across industries.
What you'll gain from this unparalleled resource is a solid structure to tackle operational risks head-on, controlling exposure to financial loss and preserving the pristine image of your esteemed company. From internal factors such as procedures, systems, people, and policies, to external factors like political and economic events, we've got your back.
Are you a C-suite executive looking to fortify your operational risk mitigation strategy? Or perhaps a vigilant board member seeking a comprehensive framework for identifying and reporting operational risk? No matter your role or industry, this deck has you covered. Derived from the cutting-edge practices in the banking realm, its applications transcend boundaries.
Unlock frameworks that will shield your business from the perils of operational risk, along with an extensive list of typical risks seen in larger enterprises. But we don't stop there – we arm you with battle-tested mitigations, equipping you to navigate the most treacherous waters with ease.
Operational Risk Management isn't just a concept; it's a force that shapes the future of your organization. Are you ready to embrace resilience and triumph over uncertainty? Join us on this transformational journey and witness the power of Operational Risk Management in action.
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Source: Best Practices in Risk Management PowerPoint Slides: Unlock the Power of Operational Risk Management PowerPoint (PPTX) Presentation Slide Deck, Affinity Consulting Partners
A comprehensive top-down framework is presented as a structured approach to identify, assess, and mitigate operational risks. The process begins with interviews involving 20 to 30 senior managers, which generate approximately 350 risks, revealing significant overlaps. This initial step serves to gather insights directly from leadership, ensuring that the identified risks are relevant and reflective of the organization's operational landscape.
Following the interviews, the next phase involves mapping these risks by business unit, risk type, and underlying drivers. This risk mapping creates a visual representation that highlights concentrations of risk across the organization. The output from this mapping feeds into strategic planning and performance reviews, ensuring that risk considerations are integrated into broader business objectives.
Key risk themes are then identified, which align with group-wide standards and facilitate themed reporting. This step is crucial for establishing a common understanding of risk across the organization. A shortlist of the top 40 risks is outlined, which is subsequently refined into a rolling "Top 20" list. This list is tailored for mitigation strategies and is used for board reporting, ensuring that senior leadership remains informed and engaged with the most pressing risks.
The framework also emphasizes the importance of linking with existing bottom-up compliance initiatives, such as loss data and risk control self-assessments (RCSAs). This integration ensures a holistic view of risk management, combining insights from both top-down and bottom-up approaches. Overall, this structured methodology not only identifies risks, but also aligns them with strategic objectives, enhancing the organization's resilience.
This PPT slide outlines significant risks associated with finance and risk management, focusing on 3 primary categories: wrongful external disclosure, deliberate wrongful external disclosure, and increased compliance burden. Each category includes a description of the risk, its drivers, implications for the business, and references to past external events.
For wrongful external disclosure, the drivers include governance, processes, and human capital. The implications highlight costs related to external staff, restitution to customers, and potential regulatory fines. Past events are cited to illustrate the real-world impact of such risks, referencing specific companies and incidents.
The second category, deliberate wrongful external disclosure, emphasizes the importance of ownership and accountability in governance. It also points to processes and incentive mechanisms as key drivers. Similar to the first category, the implications include financial burdens from external staff and restitution costs, alongside regulatory fines and legal liabilities. Notable past events are provided to reinforce the seriousness of this risk.
The final category, increased compliance burden, identifies human capital and external service providers as significant drivers. It notes the additional costs incurred from regulatory compliance, which can lead to overtime expenses and regulatory fines. The slide mentions that while this risk is often overlooked, it remains a concern for many clients, particularly in light of evolving regulations.
Overall, the slide serves as a comprehensive overview of critical risks in finance and risk management, emphasizing the need for robust governance and proactive risk mitigation strategies. It provides valuable insights for organizations looking to understand and address these challenges effectively.
This PPT slide outlines significant risks associated with private and merchant banking, focusing on various types of fraud and their implications. Each risk is categorized with specific drivers and impacts, providing a structured analysis for decision-makers.
The first risk highlighted is internal payments fraud and embezzlement, particularly from client accounts. Key drivers include governance issues related to ownership and accountability, process design flaws, and potential criminal intent among personnel. The impacts of this risk are severe, leading to write-downs, additional costs for external consultants, restitution costs, regulatory fines, and legal liabilities.
Next, the slide addresses unauthorized or fraudulent lending by internal staff. Similar to the previous risk, governance and process design are critical drivers. The consequences mirror those of internal fraud, emphasizing the financial and reputational damage that can arise from such misconduct.
The slide also discusses inappropriate or illegal lending due to failures in the credit process, particularly in customer due diligence. This risk is driven by governance, process design, and the expertise of personnel involved. The impacts are consistent with the other risks, highlighting the need for robust oversight and effective processes to mitigate financial losses.
Lastly, external theft and fraud are examined. This risk encompasses external events and criminal intent, with implications that include replacement costs for lost assets, write-downs, and legal repercussions. The emphasis on external threats underscores the importance of comprehensive security measures.
Overall, the slide serves as a critical resource for understanding the multifaceted risks in private and merchant banking, emphasizing the need for effective governance, process design, and personnel management to mitigate potential losses.
This PPT slide outlines significant risks associated with compliance and legal issues, categorized into 3 main areas: regulatory burden, fraud and theft, and errors in legal documents. Each risk is described with specific drivers, implications for the business, and references to past external events that exemplify these risks.
The first section highlights the increase in regulatory burden, driven primarily by the availability and allocation of human capital and the involvement of external service providers. This risk can lead to additional costs, such as overtime and regulatory fines. The implications suggest that organizations may face increased operational costs and potential reputational damage due to non-compliance. The past events listed, including instances from major financial institutions, underscore the real-world impact of these regulatory challenges.
The second section addresses fraud and theft, emphasizing governance and accountability as key drivers. It identifies various processes that can be vulnerable, such as design and implementation. The implications here include significant financial losses and the potential for legal repercussions. The past events cited illustrate how these risks have materialized in the industry, highlighting the importance of robust internal controls.
The final section focuses on errors in legal documents, again pointing to governance and oversight as critical factors. The implications include financial write-downs and legal liabilities, which can severely impact an organization’s bottom line. The examples provided reinforce the necessity for meticulous document management and compliance practices.
Overall, this slide serves as a critical reminder for organizations to assess their risk management strategies in compliance and legal areas, ensuring they are prepared to mitigate potential impacts effectively.
This PPT slide outlines significant risks associated with asset management, focusing on internal fraud, rogue fund management, and mis-selling practices. Each risk is detailed with its drivers and potential impacts, providing a structured overview for decision-makers.
Internal fraud, characterized by embezzlement and theft, is driven by governance issues such as ownership accountability and segregation of duties. The impacts include financial write-downs, costs associated with external consultants, and regulatory fines. This highlights the importance of robust governance structures to mitigate risks.
Rogue fund management, particularly unauthorized internal trading, shares similar governance-related drivers. The consequences mirror those of internal fraud, emphasizing the need for stringent oversight and validation processes. The slide suggests that the repercussions of such activities can lead to significant financial liabilities and reputational damage.
Mis-selling practices, especially towards retail investors, are also addressed. These practices stem from governance lapses and inadequate process design. The impacts are again consistent, with write-downs and regulatory fines being prominent. The slide points out the necessity for better training and expertise among staff to prevent unintentional errors and ensure compliance with regulatory standards.
Overall, the slide serves as a critical reminder of the multifaceted risks in asset management. It underscores the need for comprehensive governance frameworks and effective process implementation to safeguard against financial and reputational harm. Stakeholders should consider these insights when evaluating their risk management strategies.
This PPT slide outlines significant risks associated with credit, focusing on 2 primary categories: calculation errors due to incorrect input data and model methodology or algorithm errors. Each category includes a description of the risk, its drivers, implications for the business, and examples of past external events that illustrate the consequences of these risks.
For calculation errors, the slide identifies multiple drivers such as process design, implementation, and human capital issues like availability and expertise. These errors can lead to substantial financial repercussions, including billed overtime for external consultants, costs associated with restitution, regulatory fines, and legal liabilities. The mention of past events, such as the National Australia Bank incident, underscores the real-world impact of these risks, highlighting the difficulty in distinguishing between errors due to incorrect data and those stemming from other issues.
The second category, model methodology or algorithm errors, shares similar drivers and implications. It emphasizes the importance of robust processes and skilled personnel to mitigate these risks. The slide notes that these errors can also result in significant financial liabilities and regulatory scrutiny, echoing the concerns raised in the first category.
Overall, the slide serves as a critical reminder of the complexities and potential pitfalls in credit risk management. It encourages organizations to assess their processes, invest in human capital, and learn from past events to avoid similar pitfalls in the future. The structured approach to identifying risks and their implications provides a clear framework for executives to consider when evaluating their operational risk management strategies.
This PPT slide outlines significant risks associated with retail banking, specifically focusing on external theft and fraud. It categorizes these risks into 2 main types: external theft/robbery from branches and transports, and external electronic theft and fraud, which includes hacking, phishing, and other cyber threats.
For each risk type, the slide details direct impacts. In the case of external theft, the consequences include the need to write down stolen assets, the replacement costs for these assets, and the financial burden of overtime for in-house staff who manage the aftermath. There are also implications for customer compensation if funds or deposits are compromised. Regulatory fines and potential court-imposed damages add to the financial strain, alongside legal fees and the loss of recourse regarding collateral or guarantors.
The section on external electronic theft mirrors these concerns, emphasizing similar write-downs and replacement costs. It also highlights the ongoing need for in-house staff to implement controls and safeguards against such threats. The slide further notes that both types of risks can lead to significant legal expenses and regulatory penalties.
Past external events are listed for context, showcasing real-world incidents that have affected various banks. This historical perspective serves as a cautionary reminder of the tangible impacts these risks can have on financial institutions. The slide effectively communicates the multifaceted nature of these risks and underscores the importance of robust risk management strategies in the retail banking sector. Understanding these risks is crucial for any organization looking to fortify its defenses against theft and fraud.
This PPT slide outlines significant risks associated with global markets, categorized into 3 main areas: external theft, mis-selling or incorrect advice, and product design/launch risk. Each risk is accompanied by its drivers and potential impacts, providing a structured overview for decision-makers.
For external theft, the drivers include governance, processes, people, and systems, highlighting the importance of oversight and security measures. The impacts range from financial losses due to asset replacement to legal liabilities, emphasizing the need for robust security protocols and risk management strategies.
The section on mis-selling or incorrect advice identifies governance and human capital as key drivers. It points to the critical role of expertise and the potential for unintentional errors. The impacts are similar to those of external theft, with significant financial repercussions, including write-downs and regulatory fines. This underscores the necessity for accurate information dissemination and training to mitigate risks.
The back office and product design/launch risk sections further elaborate on the complexities involved in managing structured products. Governance and accountability are again highlighted as essential drivers. The potential impacts include not only financial losses, but also reputational damage, which can be particularly detrimental in the consulting space.
Overall, the slide serves as a comprehensive guide for executives to understand the multifaceted risks in global markets. It stresses the importance of governance, skilled personnel, and effective processes in mitigating these risks. This insight can help organizations prioritize their risk management efforts and allocate resources effectively.
This PPT slide outlines significant risks associated with human resources, categorized into 3 main areas: safe environment, fraud through embezzlement, and unauthorized or rogue trading. Each risk is detailed with its drivers, implications for the business, and examples of past external events that illustrate the potential consequences.
For the "Safe environment" risk, the primary drivers include governance aspects such as ownership and accountability, oversight and validation, as well as human errors. The implications for the business are significant, including the replacement costs for lost or damaged assets and potential regulatory fines. Past events from notable companies like HSBC and Grupo Santander highlight the real-world impact of these risks.
The section on "Fraud – Embezzlement" identifies similar governance drivers and emphasizes the need for robust processes and accountability. The implications here also involve financial write-downs and regulatory fines. The slide cites specific past incidents involving banks, underscoring the urgency of addressing these vulnerabilities.
Lastly, the "Fraud – Unauthorized/rogue/insider trading" section mirrors the previous sections in its structure, focusing on governance and process design. The implications again include write-downs and regulatory fines, with past events from various financial institutions providing context for the risks involved.
Overall, the slide serves as a critical reminder of the multifaceted risks in HR, urging organizations to prioritize governance and process integrity to mitigate potential financial and reputational damage. It effectively communicates the importance of proactive risk management in maintaining operational stability.
This PPT slide emphasizes the importance of scenario analysis in enhancing the understanding and reporting of significant risks within an organization. It outlines various categories of risks, including direct losses such as fines and indirect impacts like the misuse of staff time. The reputational risk is categorized as high, indicating that the consequences of these risks extend beyond financial implications.
The slide details a structured approach to risk management, presenting a process map that outlines key steps: determining methods and assumptions, data administration, communicating assumptions, performing valuations, and submitting results. Each step is crucial for ensuring accuracy and integrity in the risk assessment process. The risks and controls associated with each step are also highlighted, providing a clear view of potential pitfalls and the measures in place to mitigate them.
Existing strengths are noted, such as independent reviews for specific clients and the investigation of relevant topics like new legislation. Suggestions for improvement focus on refining the scope of investigations and increasing the frequency of reviews, which could lead to better risk management outcomes.
The data section lists various companies and their relevant experiences, illustrating real-world implications of the discussed risks. This contextualizes the theoretical aspects of the slide, making it clear that the recommendations are grounded in practical scenarios. Overall, the slide serves as a comprehensive guide for organizations looking to deepen their risk analysis capabilities and improve reporting mechanisms.
This PPT slide presents a structured framework aimed at managing risk appetite across various business units. It emphasizes the importance of treating customers fairly, aligning with local regulations, and maintaining the integrity of the Group brand. The principles outlined suggest a commitment to transparency and accountability in customer interactions.
Under the "Headline risk appetite" section, the focus is on fair treatment of customers, with a clear stance against systemic issues that could harm the brand. Specific policies and limits are established to guide behavior, including a zero-tolerance approach to customer abuse and strict limits on mis-selling compensation payments.
The framework is divided into several key areas: Product design and marketing, Distribution, Customer complaints, Compliance, and Reporting. Each area has defined principles and policies that outline responsibilities and expectations. For instance, in product design, there is an emphasis on ensuring that products are not inherently unfair and that all marketing materials accurately represent risks.
In the distribution section, accountability for product distribution is highlighted, along with compliance checks to ensure that customers are not misled. The customer complaints section underscores the importance of timely resolution and ownership of issues, indicating a proactive approach to customer service.
Compliance is treated with equal seriousness, with commitments to adhere to regulations and address potential issues proactively. The reporting section indicates a commitment to keeping customers informed and maintaining thorough records, which is crucial for transparency and trust.
Overall, this slide serves as a comprehensive guide for organizations looking to implement a robust risk management framework that prioritizes customer relations and regulatory compliance.
This PPT slide presents a structured overview of various IT risk areas, categorizing them by risk assignment and severity. Each risk area is assigned a numerical rating, indicating its level of concern, with higher numbers signifying greater urgency. The risks are detailed alongside specific issues and proposed measures to mitigate them.
User Access is highlighted as a high-risk area, with significant concerns regarding access management on critical infrastructure and applications. The proposed measures include a timeline for remediation, emphasizing the need for timely action by December 2020.
Platform Security is marked as medium risk, with issues related to system upgrades and maintenance. The slide suggests that an assessment of controls is underway, indicating a proactive approach to managing this risk.
Business Continuity and Disaster Recovery also fall into the high-risk category, with noted deficiencies in regulatory compliance. The proposed measures include a disaster recovery plan and prioritization of solutions, reflecting a strategic approach to ensuring operational resilience.
Change Management and Sourcing are both high and medium risk areas, respectively. The slide notes the necessity for a structured change management process and compliance with sourcing protocols for ongoing projects.
Security Monitoring is identified as a low-risk area, yet it still requires attention, particularly concerning identity and integrity monitoring. The measures proposed indicate a need for enhanced application security monitoring.
Overall, this slide serves as a critical tool for understanding IT risks and the necessary actions to address them. It provides a clear framework for prioritizing risk management efforts, essential for informed decision-making at the executive level.
This PPT slide outlines significant IT-related risks that organizations face, focusing on 3 specific scenarios. Each risk is detailed with its potential impacts and references to past events that illustrate the consequences of such risks.
The first risk involves a "rogue" employee with appropriate access rights who could cause substantial damage to systems or critical data. The impacts of this risk are multifaceted, including costs associated with staff overtime to recover lost data, potential fines from regulators for data breaches, and legal costs from lawsuits related to privacy infringements. Such incidents can disrupt normal business operations, leading to additional costs for re-running batch processes if systems go down.
The second risk pertains to mis-selling stemming from systematic errors in model development. This can result in significant financial losses due to defaulting clients, particularly when limits are set too high. The costs associated with recovering funds can vary based on the type of facility involved, highlighting the importance of robust risk management in financial modeling.
Lastly, the slide addresses the theft of confidential data by employees for personal gain. This risk can lead to severe repercussions, including potential fines from regulators and loss of customer trust. The slide notes that clients are typically compensated by the bank for their losses,, but the bank may still face reputational damage and a decline in revenue.
Overall, the slide serves as a critical reminder of the vulnerabilities within IT systems and the cascading effects that can arise from inadequate risk management practices. Organizations must remain vigilant and proactive in addressing these risks to safeguard their operations and maintain stakeholder confidence.
This PPT slide outlines significant risks associated with the pension and life insurance sectors, categorizing them into 3 primary areas: mis-selling practices, product design and launch risks, and model errors related to data and methodologies. Each risk is accompanied by its drivers, which include governance, processes, people, systems, and external events.
For instance, mis-selling is highlighted as a critical issue, with specific drivers such as inappropriate sales practices and misleading information in documentation. The impacts of these risks are quantified, indicating potential write-downs and additional costs incurred from external staff, along with regulatory fines and legal liabilities. This structured approach provides a clear view of how various factors contribute to risk exposure.
The product design and launch risks focus on flawed products, emphasizing the importance of ownership and accountability in governance. The slide suggests that inadequate processes and unintentional errors by personnel can lead to significant repercussions, including financial losses and regulatory scrutiny.
Model errors are also addressed, particularly those stemming from issues in actuarial valuation and data integrity. The slide indicates that reliance on flawed methodologies can result in severe operational disruptions and financial penalties.
Overall, this slide serves as a comprehensive overview of the multifaceted risks in the pension and life insurance industries. It highlights the interconnectedness of governance, processes, and human factors in managing these risks effectively. For potential customers, this insight underscores the necessity of robust risk management strategies to mitigate potential financial and reputational damage.
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