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Whose job is it to manage operational risk?
Yesterday I had the pleasure and privilege of moderating a great panel discussion on Big Data Analytics for Risk Management. The distinguished panel included Dr. Bob Mark, who was at one time CRO for a Tier 1 bank; Dr. Ravi Kalakota, who advises some of the biggest banks in the world on data strategy; and Shirish Netke, who is CEO of Amberoon, a San Francisco based startup that uses advanced machine learning for a highly visual AML monitoring solution.
On this one panel we were able to speak from the perspective of the Chief Risk Officer, Chief Data Officer, Operations Executive and Technology Provider. It turns out that all of our roles are necessary for risk management.
Data-driven operational risk management is absolutely critical. Regulators expect it, boards and shareholders expect it, and it significantly impacts the bottom line because of risk-adjusted capital requirements, and actual losses.
For too long, operational risk management has been characterized by qualitative, rather than quantitative methods. Heat maps, Key Risk Indicators, and prose statements abound in banks of all sizes.
What are the big challenges?
We explored a particular area of risk management – Anti-Money Laundering monitoring – as an example that applies to a wide range of risk management activities. What we discovered in our conversation is that:
The RegTech challenge, in partnership with its banking customers, is to minimize costs without increasing risk.
So, our conclusion is that only through multiple village chiefs (CRO, CDO, Ops and Compliance Execs, CIO with RegTech) can big progress be made in managing operational risk.
With good, well-analyzed data, operational risk will be far better managed in the future. But whichever perspective you have, don’t forget to partner with the rest of the village!
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Eimear Oconnor COO at Form3 Financial Cloud
07 November
Karla Booe Chief Compliance Officer at Zeta Services Inc.
Kyrylo Reitor Chief Marketing Officer at International Fintech Business
06 November
Konstantin Rabin Head of Marketing at Kontomatik
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