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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Dimensions of A Strategy
Micro and Macro Issues
Personal vs. Corporate Interest
Input requirements
Process requirements
Output / Achievement
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Contexts To Consider
International Influence
Industry Leadership
Organisational Growth
Managerial Ability
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
To effectively manage these issues, optimal Operational Risk
Management is non-negotiable...
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Components of OpRisk Mgt People Risk Issues
Process Risk Issues
System Risk Issues
External Risk Events
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Tools of OpRisk Mgt
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Crfocus.wordpress.com
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Lazypm.blogspot.com
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
System Issues
Availability of core applications / systems
Network intrusion
Denial of service
Data corruption / Sabotage
Unauthorised Access to Information
System Penetration Issues
Virus Attack
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
www.computerweekly.com
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
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
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Food for Thought
Is Operational Risk Management not integral
in achieving your organization’s Strategic Goal and Competitive
Advantage?
OpRisk Mgt as a Strategic Tool – Eneni Oduwole, Mar. 2013
Thank you...Eneni Oduwole
Group Head, Operational Risk Management
Guaranty Trust Bank Plc
234-8033045896