The management of data as a key enterprise asset is critical for the deployment of an effective operational risk management and control system, say Steve Manz and Nolan Gesher of ProfitStars.
Transactional risks, compliance risks, reputation risks, and enterprise risk (the aggregation and interplay of smaller, discrete risks) create a continuous stream of possibility for loss.
Exception management is designed to identify and control these disparate risks. Exception management workflow pertains not only to the reconciliation process with which it is commonly identified but also to compliance issues and risk management efforts.
Most organisations view these three processes as separate but somewhat related tasks and often deploy distinct technology solutions to manage each, when in fact these processes are linked quite closely and may be integrated into a comprehensive operational risk management framework.
The defining characteristic of these processes is the data that flows through each. While reconciliation, risk management and compliance monitoring all warrant customised technology solutions, in order for financial institutions to fully recognise the benefits and actualise the return on these technology investments, they must leverage the data common to each of these processes through the deployment of flexible, rules driven data solution.
This ProfitStars' paper explores the foundations of managing data for operational risk control and points the way to designing flexible, extensible exception management approaches that can achieve this integrated vision.
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