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Monitoring your operational risks

The aim of the process we propose is to put in place a method of monitoring operational risks that is not only effective, but also permanent and transparent. Achieving this is made possible by combining three elements: 1) a method based on analysing the processes, plus a stringent evaluation of the risks and risk factors, 2) the active participation of the parties responsible for making this analysis, as well as designing and implementing the monitoring plan itself, and 3) a tool for supporting the process and then ensuring that the monitoring is carried out through time.

Context and project

Operational risk monitoring is similar in many ways to quality management. In both cases, you have to analyse activities, create a description for them, identify real and potential incidents, assess the impact, take action to avoid problems while reducing their consequences, carry out checks, review and re-assess, etc.

The approach we take and our experience in management gained by using processes and workflows, as well as our own tools, delivers a significant level of added value to the overall management process.

The project itself, which will last for between three months and a year, will take place in three main phases:

1. a pilot phase to try out the method and tools being used,
2. work with process groups who analyse the risks and define the monitoring measures required,
3. roll-out to implement checks and re-assessments, as well as make any adjustments needed.

Banking sector

We have pooled our expertise with the skills of European Banking Consulting, a Paris-based management consultancy firm that specialises in banking. Working with them, we have developed a far-reaching yet specific approach for implementing an ongoing check on operational risks in financial institutions.

Benefits

Apart from reducing the level of operating risk, the approach we are proposing provides a triple benefit:

• it allows to understand fully all of the risks involved in sensitive processes and then adjust the level of control depending on how critical the process is,
• it is participative (i.e. management is involved in implementing a permanent control),
• it brings visibility and recurrence to the management process.

In addition, as both the parties involved and management review the why and how of the tasks carried out in the processes being analysed, this approach also generates gains in efficiency (see Animation for Improving your Processes).

In the end, this approach provides an opportunity to show both the authorities and customers that initiatives have been taken to improve transparency and compliance.

The tool

The process is based on a highly ergonomic tool developed by us and which we propose to use throughout the project. It is the best way to structure all of the information gathered and the vehicle for implementing effective monitoring of the operating risk.

After the project has been completed, the tool can be stored or transposed into the company’s IT environment.

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