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Operational Risk Management: A Complete Guide to a Successful Operational Risk Framework

Book Description

A best practices guide to all of the elements of an effective operational risk framework

While many organizations know how important operational risks are, they still continue to struggle with the best ways to identify and manage them. Organizations of all sizes and in all industries need best practices for identifying and managing key operational risks, if they intend on exceling in today's dynamic environment.

Operational Risk Management fills this need by providing both the new and experienced operational risk professional with all of the tools and best practices needed to implement a successful operational risk framework. It also provides real-life examples of successful methods and tools you can use while facing the cultural challenges that are prevalent in this field.

  • Contains informative post-mortems on some of the most notorious operational risk events of our time

  • Explores the future of operational risk in the current regulatory environment

  • Written by a recognized global expert on operational risk

An effective operational risk framework is essential for today's organizations. This book will put you in a better position to develop one and use it to identify, assess, control, and mitigate any potential risks of this nature.

Note: The ebook version does not provide access to the companion files.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Dedication
  6. Preface
  7. Acknowledgments
  8. Chapter 1: Definition and Drivers of Operational Risk
    1. THE DEFINITION OF OPERATIONAL RISK
    2. 2012 LONDON OLYMPICS: A CASE STUDY7
    3. OPERATIONAL RISK MANAGEMENT AND OPERATIONAL RISK MEASUREMENT
    4. DRIVERS OF OPERATIONAL RISK MANAGEMENT
    5. KEY POINTS
    6. REVIEW QUESTIONS
    7. NOTES
  9. Chapter 2: The Regulatory Push
    1. HISTORY OF THE BASEL ACCORDS
    2. RULES OF THE ACCORDS
    3. ADOPTION OF BASEL II IN EUROPE
    4. ADOPTION OF BASEL II IN THE UNITED STATES
    5. IMPACT OF THE FINANCIAL CRISIS
    6. THE FUTURE
    7. KEY POINTS
    8. REVIEW QUESTIONS
    9. NOTES
  10. Chapter 3: The Operational Risk Framework
    1. OVERVIEW OF THE OPERATIONAL RISK FRAMEWORK
    2. THE FOUNDATIONS OF THE FRAMEWORK
    3. THE FOUR DATA BUILDING BLOCKS
    4. MEASUREMENT AND MODELING
    5. REPORTING
    6. RISK APPETITE
    7. KEY POINTS
    8. REVIEW QUESTIONS
    9. NOTE
  11. Chapter 4: Operational Risk Governance
    1. ROLE OF GOVERNANCE
    2. FIRST LINE OF DEFENSE
    3. SECOND LINE OF DEFENSE
    4. THIRD LINE OF DEFENSE
    5. RISK COMMITTEES
    6. KEY POINTS
    7. REVIEW QUESTIONS
    8. NOTES
  12. Chapter 5: Culture and Awareness
    1. WINNING OVER THE FIRM
    2. MARKETING AND COMMUNICATION
    3. TRAINING
    4. PLANNING
    5. THE “USE TEST”
    6. KEY POINTS
    7. REVIEW QUESTION
    8. NOTE
  13. Chapter 6: Policies and Procedures
    1. THE ROLE OF POLICIES, PROCEDURES, GUIDELINES, AND STANDARDS
    2. BEST PRACTICES
    3. OPERATIONAL RISK POLICY
    4. SAMPLE OPERATIONAL RISK POLICY
    5. SAMPLE STANDARDS, PROCEDURES, AND GUIDELINES
    6. KEY POINTS
    7. REVIEW QUESTION
  14. Chapter 7: Internal Loss Data
    1. OPERATIONAL RISK EVENT DATA
    2. INTERNAL LOSS DATA OR INTERNAL OPERATIONAL RISK EVENTS
    3. RISK EVENT CATEGORIES
    4. USING THE BASEL RISK CATEGORIES
    5. MINIMUM LOSS DATA STANDARDS
    6. WHERE SHOULD OPERATIONAL RISK EVENT DATA BE COLLECTED?
    7. WHEN SHOULD OPERATIONAL RISK EVENT DATA BE COLLECTED?
    8. HOW SHOULD OPERATIONAL RISK EVENT DATA BE COLLECTED?
    9. KEY POINTS
    10. REVIEW QUESTIONS
    11. NOTES
  15. Chapter 8: External Loss Data
    1. EXTERNAL OPERATIONAL RISK EVENT DATA
    2. SOURCES OF EXTERNAL LOSS EVENT DATA
    3. COMPARISONS BETWEEN SUBSCRIPTION AND CONSORTIUM DATABASES
    4. CHALLENGES OF EXTERNAL DATA
    5. KEY POINTS
    6. REVIEW QUESTION
    7. NOTES
  16. Chapter 9: Business Environment Internal Control Factors: Key Risk Indicators
    1. KEY RISK INDICATORS
    2. SELECTING KRIs
    3. THRESHOLDS
    4. KRI STANDARDS
    5. KRI CHALLENGES
    6. METRICS EXAMPLES
    7. KEY POINTS
    8. REVIEW QUESTION
    9. NOTE
  17. Chapter 10: Risk and Control Self-Assessments
    1. THE ROLE OF ASSESSMENTS
    2. RCSA METHODS
    3. RCSA SCORING METHODS
    4. RCSA BEST PRACTICES
    5. KEY POINTS
    6. REVIEW QUESTION
    7. NOTES
  18. Chapter 11: Scenario Analysis
    1. ROLE OF SCENARIO ANALYSIS
    2. SCENARIO ANALYSIS APPROACHES
    3. SCENARIO ANALYSIS OUTPUT
    4. KEY POINTS
    5. REVIEW QUESTIONS
    6. NOTES
  19. Chapter 12: Capital Modeling
    1. OPERATIONAL RISK CAPITAL
    2. BASIC INDICATOR APPROACH
    3. STANDARDIZED APPROACH
    4. ADVANCED MEASUREMENT APPROACH
    5. INSURANCE
    6. DISCLOSURE
    7. FUTURE OF CAPITAL REQUIREMENTS
    8. KEY POINTS
    9. REVIEW QUESTION
    10. NOTES
  20. Chapter 13: Reporting
    1. ROLE OF REPORTING
    2. LOSS DATA REPORTING
    3. RISK AND CONTROL SELF-ASSESSMENT REPORTING
    4. KEY RISK INDICATOR REPORTING
    5. SCENARIO ANALYSIS REPORTING
    6. CAPITAL REPORTING
    7. ACTION TRACKING REPORTING
    8. A CONSOLIDATED VIEW
    9. DASHBOARDS
    10. KEY POINTS
    11. REVIEW QUESTION
  21. Chapter 14: Risk Appetite
    1. THE ROLE OF RISK APPETITE
    2. REGULATORY EXPECTATIONS
    3. RANGE OF PRACTICE IN RISK APPETITE AND TOLERANCE METHODS
    4. IMPLEMENTING A RISK APPETITE FRAMEWORK
    5. MONITORING OPERATIONAL RISK APPETITE
    6. RISK APPETITE TODAY
    7. KEY POINTS
    8. REVIEW QUESTION
    9. NOTES
  22. Chapter 15: Reputational Risk and Operational Risk
    1. WHAT IS REPUTATIONAL RISK?
    2. REPUTATIONAL IMPACT
    3. REGULATORY OVERSIGHT OF REPUTATIONAL RISKS
    4. REPUTATIONAL RISK MANAGEMENT FRAMEWORK
    5. KEY POINTS
    6. REVIEW QUESTION
    7. NOTES
  23. Chapter 16: Operational Risk and Convergence
    1. OPERATIONAL RISK AS A CATALYST FOR CONVERGENCE
    2. GOVERNANCE, RISK, AND COMPLIANCE (GRC)
    3. CONVERGED OR GRC REPORTING
    4. KEY POINTS
    5. REVIEW QUESTION
    6. NOTE
  24. Chapter 17: Best Practices in Related Risk Management Activities
    1. NEW-PRODUCT APPROVAL
    2. SUPPLIER AND THIRD-PARTY RISK
    3. LEGAL RISK MANAGEMENT
    4. REGULATORY RISK MANAGEMENT
    5. PEOPLE RISK MANAGEMENT
    6. FRAUD RISK MANAGEMENT
    7. TECHNOLOGY RISK MANAGEMENT
    8. WEATHER RISK
    9. PANDEMIC PLANNING
    10. STRATEGIC RISK
    11. KEY POINTS
    12. REVIEW QUESTION
    13. NOTES
  25. Chapter 18: Case Studies
    1. JPMORGAN WHALE: RISKY OR FRISKY?
    2. REVIEW QUESTIONS
    3. NOTES
  26. Appendix: Answers to Review Questions
  27. About the Author
  28. About the Website
  29. Index