Sunday, December 25, 2011
The Operational Risk Management
Despite the strengthening of regulations on risk management in recent years, the banking sector could not avoid. Subprime crisis, which by contagion has affected the rest of the economy, has highlighted the fragility of the various devices to control risks in force in the financial institutions, rating agencies and supervisors of financial markets. This weakness was also reflected in internal fraud which cost Society General 4.9 billion Euros.
It follows from these two major events the observation that the advent and implementation of new regulations do not allow companies to be fully exempt from risk factors to the origin of these losses. Indeed, recent actions by U.S. authorities to strengthen the financial sector by extending the powers of the Federal Reserve Bank and the European ideas and initiatives can only be effective if the various players take full ownership of their system risk management.
Appropriating the device operational risk management is putting in place a structured approach marked by a number of essential steps which include:
This is to define a framework that sets out the principles and rules of the potential risks have been shown to affect the company (benchmarks, risk governance committee ...). Indeed, the different activities and policies initiated by the company to expose operational risks can generate losses. These risks can be understood only with the establishment of a true corporate culture. The policy of operational risk management is the first step of this investment after the definition of its risk profile. It must be in perfect harmony with the various regulations, including Basel II, which involves the establishment of a regulatory monitoring for a regular update of this policy.
Finally the definition of a policy of operational risk management must be built in the same priority as commercial actions to prevent deterioration in the performance of the company.