Increasing stature of operational risk within the institution and limiting execution risk of changing departments

Increasing stature of operational risk within the institution and limiting execution risk of changing departments

 By Benoit Saint-Jevin, Director, Head of Global Markets Americas OPC & TAC Coordination, BNP Paribas

Benoit, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

After experiences in Asia and Europe, I am currently helping develop BNP’s business in a sustainable way in the Americas. In the first line of defense, my main focus is to build a stronger risk management and control framework in a way that enables the business and makes it safer. The challenge is to meet increased requirements for controls and documentation, while making the framework more flexible, simple, client-oriented.

What, for you, are the benefits of attending a Congress like the ‘Operational Risk Management USA Congress’?

It is important to stay on top of the constant transformation of our industry. I am looking forward to share ideas with peers about the challenges and opportunities in front of us, learn about best practices and develop new relationships.

You will be participating in a panel discussion to discuss increasing stature of operational rise within the institution and limiting execution risk of changing departments. What do you think will be the key talking points amongst panelists and why?

I wouldn’t be surprised if the discussion covered topics like roles and responsibilities, data, technology. Roles and responsibilities are sometimes not as clear on operational risk as on some other risks, there are still a lot of discussions around first and second line of controls. Data and technology are essential to give senior management valuable and actionable operational risk information, I feel that there is a lot of work to be done in that field, and that is a condition to increase stature of this risk. They are also critical to the execution of change management and doing more with less. Then they also come with a risk to lose human expertise and ethics.

What are the key considerations that need to be met when increasing stature of operational risk within an organization? What key challenges would you expect to face?

I think that the ability to understand and actually manage this risk is a key driver: Operational risk data needs to go beyond just following existing risks and controls, to increase its stature and be used in strategic decisions, it needs to help anticipate and mitigate risk. Another aspect is to attract talent and assess the performance of operational risk management function. The operational risk function also needs to act as an actual risk manager as opposed to just documenting control results

An example is the ability to manage the operational risk capital, which is limited by data and regulatory aspects.

 How could you effectively limit execution risk of changing departments?

There needs to be a combination of factors, but embedding operational risk management ahead of the change helps: conducting a risk/reward analysis in addition to the ROI to shape the project, then clear test and approval steps during implementation, communication and training, anticipating the adjustment of procedures, controls and indicators.

The design and approval of test procedure is a risk area, where tests are only as good as the scenario they cover.

 


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