Operational risk management a strategic tool

Operational Risk Management

– A Strategic Approach to Business Sustainability

OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013

Outlook

For any business to succeed and stay ahead of the pack, these ingredients are required: A well thought out plan A business model that creates a unique identity A culture that is strong and cannot be imitated

These ingredients make up what can be termed as the “Strategy” of the organization


Features of a Good Strategy Transforms the organization continuously

Target driven with short, medium and long term goals

Formal and Confidential document that is made up of interlinked checklists

Provides details on input requirements – engine required to drive and achieve goals

Is the ‘Daily Guide’ of the organization, and is reviewed periodically


Points of Leverage

Achieved with the existence of an All-In Mentality – goals are individually and collectively driven

Is driven by a Strong Culture

Aims at goals that are of Common Interest

Ensures Internal Integration

Responds to the Environment


Dimensions of A Strategy

Micro and Macro Issues

Personal vs. Corporate Interest

Input requirements

Process requirements

Output / Achievement


Contexts To Consider

International Influence

Industry Leadership

Organisational Growth

Managerial Ability


Points to Ponder On For an organization to remain relevant, it must have a

strategy for achieving Competitive Advantage

To have the right Strategy, it must have the right Outlook

To achieve the Strategy it must have the right resources – people, processes, systems and response to shocks


Long and Short…

No Strategy can achieve its goals without a plan to manage:

People resources Processes Systems External / Unforeseen Events

A Strategy is achieved when these resources are optimally managed


To effectively manage these issues, optimal Operational Risk

Management is non-negotiable...


Introducing Operational Risk Management (OpRisk) OpRisk manages the loss or risk of loss resulting from

improper or non-management of people, process, system and externally triggered issues

It measures: The probability that business objectives may not be

met due to operational issues The degradation, effectiveness and consistency in

managing operational issues


Components of OpRisk Mgt People Risk Issues

Process Risk Issues

System Risk Issues

External Risk Events


Tools of OpRisk Mgt


People Risk Issues

Quality of Recruits; Sourcing and Selection strategy

Controls embedded in the recruitment process such as background checks

Retention strategy for top-talents

Strategy for training; Acculturation of staff

Monitoring Attrition rate and concentrations

Managing and benefiting from staff exits


Crfocus.wordpress.com


Process Issues Effectiveness of process designs – simple or complex;

flexible or rigid

Manual vs. Automated processes

Cost effectiveness of process controls

Performance gradient offered

Adequacy of embedded controls; Execution of controls

Vendor Management

Occupational Health & Safety Issues


Lazypm.blogspot.com


System Issues

Availability of core applications / systems

Network intrusion

Denial of service

Data corruption / Sabotage

Unauthorised Access to Information

System Penetration Issues

Virus Attack


www.computerweekly.com


External Events Adherence to Regulatory Stipulations

Legal Risk Management

Business Continuity Management

Compliance Risk Management

Shift in Industry trends; Global trends

Macro-economic conditions

Available Infrastructure


Points of Leverage Sorted All-In Mentality – People Strategy

Strong Culture – People + Processes Strategies

Common Interest – People Strategy

Internal Integration – People + Processes + Systems + External Response Strategies

Responds to the Environment – People + Processes + Systems + External Response Strategies


Drivers of OpRisk And Strategy

OpRisk Management Strategy

Focused on sustainable Value Creation

Drives and Delivers Value Creation

Is inherent in all business activities

Determines Business Activity

Ensures Risk Optimal Mitigation

Is built on Meaningful Risk Taking

Measured by Risk Indicators

Measured by Performance Indicators


Food for Thought

Is Operational Risk Management not integral

in achieving your organization’s Strategic Goal and Competitive

Advantage?


Thank you...Eneni Oduwole

Group Head, Operational Risk Management

Guaranty Trust Bank Plc

[email protected]

234-8033045896

Operational risk management a strategic tool

Business

Transcript of Operational risk management a strategic tool