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Casual Articles - Basel II and Operational Risk - A Primer
As business professionals, we spend lots of our time interacting with all sorts of people – clients, suppliers, consultants etc. Our interactions can be in person, on the telephone, by email or even these days, by sms.If you do some reading on the subject, you’ll quickly find the predominant school of thought is that all communication must be “professional”, and that if it’s not, you risk damaging your reputation or credibility.Part of communicating professionally it seems, is keeping our language and sentence structure formal, using important sounding words and not letting anyone in on the big secret - that we are actuall
Once the Risk Assessment has been completed the previously defined risk reduction policies need to be implemented.
Implementing Basel II is not a once off operation. It is an ongoing process aimed at limiting a bank’s exposure to risks. In the operational area reducing and containing operational risks so as to control the amount of capital that will have to be reserved. This ongoing process can only be achieved through the following steps;
•Fine-tune Operational Risk controls – New products, process and techniques will need to be brought under appropriate controls. Existing controls will need to be reviewed and changed where necessary.
<If employers and employees work together to reduce the number and severity of accidents and incidences in the workplace, everyone benefits from it. From the employers point of view, it is an important way of reducing legal exposure and from an employees point of view, it means ensuring your health and wellbeing are protected, both for your sake and for those of your family and friends.Here is a quick and easy three-step plan to help you work together to create a safer workplace for everyone.Step 1: Locate any hazardsHow do you locate hazards in the workplace? Follow these simple guidelines:S
Credit risk is well catered for in exceptional detail. Credit risks are clearly understood by all players, for credit is the reason why banks exist. In the current mad scramble to meet the Basel II requirements, credit risks have been getting the lion’s share of attention while far less attention has been given to the operational risk issues. Basel II is more than just reserving capital against credit and operational risk. Now for the first time, banks have to take into account the operational risk aspects as well.
To start with, Basel II provides a range of options for determining the capital requirements of credit and operational risks. This allows banks and bank supervisors the opportunity to select the most appropriate option for their operations and their financial market infrastructure. Additionally, allowance is made for a limited degree of national discretion in the way in which each of these options may be applied.
Based on the Basel II requirements, I summarize briefly what needs to be done to effectively implement the operational risk aspects of this important international standard.
The starting point is the board of the bank and the creation of an appropriate “Risk Management Policy”. It should be remembered that bank boards generally do not have members with operations experience. Very often board members are drawn from business areas within the bank whose primary concern is revenue generation. Operational risk controls cost money and generally reduce profits – which means that they are not really a popular boardroom subject. Bank boards need to be educated and coaxed into the role they have to play in the mitigation of Operational Risk.
To effectively implement operational risk controls it is first necessary to identify the risks and then to establish appropriate written board policies and procedures to reduce these. These policies are the foundation for the development of risk control measures and need to be established for the whole range of operational issues including products, processing, IT & security and business continuity.
Risk mitigation can only be effective if a centralized risk management unit controls the whole risk reduction process. Most banks internal risk functions are fragmented and split over numerous areas (such as IT security, internal audit, physical security etc.) that tends to render a common risk policy ineffective. A critical element in the whole approach to operational risk control is the centralization of this function at a director level within the bank.
Once the appropriate policies are in place the next step is to undertake a risk assessment. Risk assessment is the process that identifies and evaluates the internal and external factors that could adversely affect the achievement of a banking organization’s operational, information and compliance objectives. In the full sense of the word this should cover all the risks such as credit, market, liquidity and operational risk. For our purposes we limit our focus on operational risk alone. Under Basel II operational risk is defined as “… the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”. This definition includes legal risk, but excludes strategic and reputational risk.
Basel II is specific on the actions that need to be taken in operational risk management. These actions are based on international risk containment standards, most of which have been developed through the Bank for International Settlements. There is a strong emphasis on detailed definitions and documentation relating to the use of the methods, the development of policies and their implementation. There is less focus on technology and more on doing.
Once the Risk Assessment has been completed the previously defined risk reduction policies need to be implemented.
Implementing Basel II is not a once off operation. It is an ongoing process aimed at limiting a bank’s exposure to risks. In the operational area reducing and containing operational risks so as to control the amount of capital that will have to be reserved. This ongoing process can only be achieved through the following steps;
•Fine-tune Operational Risk controls – New products, process and techniques will need to be brought under appropriate controls. Existing controls will need to be reviewed and changed where necessary.
This article is a guide for anyone who is considering setting up a balloon ride business anywhere in the world.Where to base your balloon ride?This is the most important factor to consider at the planning stage. Either you base your balloon ride near to a large population centre, with access to the countryside, or you base it in a more isolated area which has a steady stream of tourists passing through it. Where ever you base your balloon ride business, make sure you have access to a steady stream of customers. Africa, Australia, Central and South America, Middle East and Asia -- these places have endless spots of t
To start with, Basel II provides a range of options for determining the capital requirements of credit and operational risks. This allows banks and bank supervisors the opportunity to select the most appropriate option for their operations and their financial market infrastructure. Additionally, allowance is made for a limited degree of national discretion in the way in which each of these options may be applied.
Based on the Basel II requirements, I summarize briefly what needs to be done to effectively implement the operational risk aspects of this important international standard.
The starting point is the board of the bank and the creation of an appropriate “Risk Management Policy”. It should be remembered that bank boards generally do not have members with operations experience. Very often board members are drawn from business areas within the bank whose primary concern is revenue generation. Operational risk controls cost money and generally reduce profits – which means that they are not really a popular boardroom subject. Bank boards need to be educated and coaxed into the role they have to play in the mitigation of Operational Risk.
To effectively implement operational risk controls it is first necessary to identify the risks and then to establish appropriate written board policies and procedures to reduce these. These policies are the foundation for the development of risk control measures and need to be established for the whole range of operational issues including products, processing, IT & security and business continuity.
Risk mitigation can only be effective if a centralized risk management unit controls the whole risk reduction process. Most banks internal risk functions are fragmented and split over numerous areas (such as IT security, internal audit, physical security etc.) that tends to render a common risk policy ineffective. A critical element in the whole approach to operational risk control is the centralization of this function at a director level within the bank.
Once the appropriate policies are in place the next step is to undertake a risk assessment. Risk assessment is the process that identifies and evaluates the internal and external factors that could adversely affect the achievement of a banking organization’s operational, information and compliance objectives. In the full sense of the word this should cover all the risks such as credit, market, liquidity and operational risk. For our purposes we limit our focus on operational risk alone. Under Basel II operational risk is defined as “… the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”. This definition includes legal risk, but excludes strategic and reputational risk.
Basel II is specific on the actions that need to be taken in operational risk management. These actions are based on international risk containment standards, most of which have been developed through the Bank for International Settlements. There is a strong emphasis on detailed definitions and documentation relating to the use of the methods, the development of policies and their implementation. There is less focus on technology and more on doing.
Once the Risk Assessment has been completed the previously defined risk reduction policies need to be implemented.
Implementing Basel II is not a once off operation. It is an ongoing process aimed at limiting a bank’s exposure to risks. In the operational area reducing and containing operational risks so as to control the amount of capital that will have to be reserved. This ongoing process can only be achieved through the following steps;
•Fine-tune Operational Risk controls – New products, process and techniques will need to be brought under appropriate controls. Existing controls will need to be reviewed and changed where necessary.
<Anyone who has thought about teaching abroad as a way to see the world while both acting as an ambassador for this or her own culture and learning the culture of another country first-hand has probably considered teaching in an international school. And there are plenty of opportunities for those qualified to do just that.Those serious about teaching in an international school have only to perform a Google search on international schools in the countries of their choice. Given that there are currently more than four thousand such schools around the globe, and that most of them are looking for competent teachers, the odds of fin
To effectively implement operational risk controls it is first necessary to identify the risks and then to establish appropriate written board policies and procedures to reduce these. These policies are the foundation for the development of risk control measures and need to be established for the whole range of operational issues including products, processing, IT & security and business continuity.
Risk mitigation can only be effective if a centralized risk management unit controls the whole risk reduction process. Most banks internal risk functions are fragmented and split over numerous areas (such as IT security, internal audit, physical security etc.) that tends to render a common risk policy ineffective. A critical element in the whole approach to operational risk control is the centralization of this function at a director level within the bank.
Once the appropriate policies are in place the next step is to undertake a risk assessment. Risk assessment is the process that identifies and evaluates the internal and external factors that could adversely affect the achievement of a banking organization’s operational, information and compliance objectives. In the full sense of the word this should cover all the risks such as credit, market, liquidity and operational risk. For our purposes we limit our focus on operational risk alone. Under Basel II operational risk is defined as “… the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”. This definition includes legal risk, but excludes strategic and reputational risk.
Basel II is specific on the actions that need to be taken in operational risk management. These actions are based on international risk containment standards, most of which have been developed through the Bank for International Settlements. There is a strong emphasis on detailed definitions and documentation relating to the use of the methods, the development of policies and their implementation. There is less focus on technology and more on doing.
Once the Risk Assessment has been completed the previously defined risk reduction policies need to be implemented.
Implementing Basel II is not a once off operation. It is an ongoing process aimed at limiting a bank’s exposure to risks. In the operational area reducing and containing operational risks so as to control the amount of capital that will have to be reserved. This ongoing process can only be achieved through the following steps;
•Fine-tune Operational Risk controls – New products, process and techniques will need to be brought under appropriate controls. Existing controls will need to be reviewed and changed where necessary.
<You’re just getting over the shock of having become unemployed. You know you need to begin a job search, but you may not know the best way to proceed, or where to start.More than likely, you will dust off your old resume and modify it to include your most recent job experience. Most people search the classifieds and Internet job sites for job openings matching their qualifications. They then submit their resumes to these postings. You will probably do the same with your modified resume.If you follow this routine, you will very likely experience a long and frustrating job search. At the end of this exhausting journey, y
Once the appropriate policies are in place the next step is to undertake a risk assessment. Risk assessment is the process that identifies and evaluates the internal and external factors that could adversely affect the achievement of a banking organization’s operational, information and compliance objectives. In the full sense of the word this should cover all the risks such as credit, market, liquidity and operational risk. For our purposes we limit our focus on operational risk alone. Under Basel II operational risk is defined as “… the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”. This definition includes legal risk, but excludes strategic and reputational risk.
Basel II is specific on the actions that need to be taken in operational risk management. These actions are based on international risk containment standards, most of which have been developed through the Bank for International Settlements. There is a strong emphasis on detailed definitions and documentation relating to the use of the methods, the development of policies and their implementation. There is less focus on technology and more on doing.
Once the Risk Assessment has been completed the previously defined risk reduction policies need to be implemented.
Implementing Basel II is not a once off operation. It is an ongoing process aimed at limiting a bank’s exposure to risks. In the operational area reducing and containing operational risks so as to control the amount of capital that will have to be reserved. This ongoing process can only be achieved through the following steps;
•Fine-tune Operational Risk controls – New products, process and techniques will need to be brought under appropriate controls. Existing controls will need to be reviewed and changed where necessary.
<Freelancers are just like mercenaries. They find a job to do; they do it without question; they get their pay and leave through the front door.Freelancers do not have to like the people they work for, nor do they have to abide by the organization’s politics. All they have to do is take the job, finish it according to specifications, and repeat the process over and over again.Freelancing isn’t a very appealing premise to some people. For one, there is no job security. If the freelancer is unable to find jobs to do, he goes hungry. Another point would be that freelancers get no benefits such as dental plans, insurance, and o
Once the Risk Assessment has been completed the previously defined risk reduction policies need to be implemented.
Implementing Basel II is not a once off operation. It is an ongoing process aimed at limiting a bank’s exposure to risks. In the operational area reducing and containing operational risks so as to control the amount of capital that will have to be reserved. This ongoing process can only be achieved through the following steps;
•Fine-tune Operational Risk controls – New products, process and techniques will need to be brought under appropriate controls. Existing controls will need to be reviewed and changed where necessary.
•Feedback on Policy – Experience will indicate whether the Operational Risk policy is both effective and appropriate. This may result in the need to refine the Policy and the Controls over time.
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