Operational Risk Management

Financial organizations continue to evaluate and manage a broad range of complex risks across large global environments including compliance, PPM, staff, IT, environmental and various other facets of business. Risk Management is a fundamental process in financial services aimed at lowering the chance of future events having an impact on the company. Alignment to industry best practices and standards (such as Basel II) calls for continuous improvements in the way business is done relative to operations; as an organization ESP focuses on reducing our client’s risk exposure, improving decision-making and creating opportunities.

Do you have the right framework for Risk Management?

Operational Risk involves everything outside of credit and market risk, typically associated with the Operations group but utilized at every level. To effectively manage Risk within an organization there needs to be common definitions in place that are accepted firmwide and used effectively. Firms tend to adopt a unique terminology within their own implementation of how risks should be managed. In many cases these are loosely based and do not tie the strategic to the tactical implementation, getting down to the substance of “how”.

  • Enterprise Solution
    Global Cross Line-of-Business Standardization: within a major Financial Services institution ESP developed a Categorization and Sub-Categorization framework as the building block for a standard Operational Risk environment including Organizational, Human Capital, Policy & Process, and Information Technology. After establishing the baseline, ESP performed a global analysis to map and leverage existing procedures, updated, and communicated them within the new framework. There was a significant increase in shareholder value through efficiencies gained from global standards.

 

Have you done Process Mapping, set your KPIs, and seen progress in Dashboards?

An independent self assessment helps stakeholders identify and measure the actual current state Operational Risk environment based on subjective and objective information gathered. Understanding exactly where your business unit (or the entire organization) stands when measuring against corporate objectives allows for the most efficient and effective deployment of Risk Management. Only once current processes are documented can a plan can be put in place, maturity goals can be set and dashboards created to help drive improvement of corporate risk maturity.

  • Enterprise Solution
    Independent Maturity Assessments: ESP has successfully analyzed corporate risk landscape, provided insight and supported building the proper culture at many Fortune 100 clients. Our maturity assessment methodology has uncovered, communicated and established improvement roadmaps across multiple global business units within the firms. Scorecards completed, goals set, and plans to improve have helped increase overall controls within the firms by as much as 30% within the first year alone. 

Are you really Managing Operational Risks?

Operational Risk is highly complex with each organization having its own set-up, strategy and challenges. ESP’s proprietary Risk Management Methodology (RM2) easily aligns to integrate within any environment by breaking the view down to 4 unique components: Governance, Security, Resources, and Culture. Managing Risk involves tools to identify, assess, control and manage ongoing risks; these can range from Enterprise level Risk Management tools down to basic spreadsheet processes and no one tool handles everything on its own. Establishing best practices for managing Risks within these tools should involve experienced integration to incorporate self assessments, scorecards, processes, indicators, escalation triggers and loss events; RM2 is built on these principles.

ESP has the industry experience within Financial Services supporting companies in changing and improving the way they manage Risk. For any questions or more information, please contact us.