Operational Risks and Measurements

While understanding and capturing Financial, Credit and indeed Market risks for many financial institutions is regarded as somewhat ‘core business’, and financial ratio measurements can capture such risks with a good degree of precision, Operational Risks are sometimes seen as more nebulous. This viewpoint stems from the fact that capturing operational risks and measuring these with the same degree of precision, is commonly regarded as more difficult. Nevertheless Operational Risks have been seen through history as having a significant impact on financial institutions. Take for example the current issues of behaviours and culture within major financial planning groups and the impact this has on reputations. There have been numerous recent incidents of fraud investigated, both internal and external.

Credit Card fraud and Identity theft alone continues to be a major cost to the industry So how should you capture and measure all these aspects of Operational risk? TRB Director Bruce Hills believes there is a fine balance between identifying key risks and ALL risks. If the latter approach is taken, the list can be lengthy and then appropriate visibility and thus management of these risks can be ‘lost in the maze’.

TRB can help you with an experienced independent view on identifying, measuring and managing Operational Risk within your business.