practical operational risk management - mitpm conference
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TRANSCRIPT
PRACTICAL OP RISK MANAGEMENT
Selena Sol presents…..
[email protected]://www.linkedin.com/pub/eric-tachibana/0/33/b53
http://www.slideshare.net/selenasol
A practical summary for the career curious
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QUESTIONWho among you would brag to your friends about getting a fun-filled job in
•Risk Management•Compliance•Information Security•Audit
I’ve got 3 words for all of you who didn’t raise your hands…
RISK
IS
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SEXY!!!
PROFIT =
WHY
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WHO3REVENUE - COST
PROFIT = REVENUE - COSTRISK PROTECTS REVENUE•Platform failure stops revenue flow•Platform limitation prevents expansion into new markets•Regulatory Capital tied up and uninvestable•Our stock price tanks due to crash•Customers just don’t trust us
RISK REDUCES COST• We’re fined by
regulators• We are inundated with
external and internal audits
• Civil actions• More resources
devoted to fire fighting issues
Risk is sexy because your CEO thinks it’s sexy
(read as more jobs, higher profile, more comp)
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Sell
Operational Risk
Deliver/Build
Supply
Business &
Strategic Mgmt
Market & Credit Risk
INHERENT RISK – CONTROLS = RESIDUAL RISK
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INHERENT RISK – CONTROLS = RESIDUAL RISKWHY
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What are the sources of operational risk?• People• Process• Systems• External events
How do you know where to look for risk?• Standards-setting bodies• Common sense
How do you go about looking for risk?• Formal process to self id issues• Internal & external assessors
Risk is sexy because you get to experience the total firm
INHERENT RISK – CONTROLS = RESIDUAL RISKWHY
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What do controls do?• Prevent• Mitigate• Recover
How do you govern controls?• Staff the function• Strategically align risk with culture & values• Prioritize & handle exceptions• Standardize as appropriate• Test• Report• Continuously improve
Risk is sexy because it is really challenging to succeed
INHERENT RISK – CONTROLS = RESIDUAL RISKWHY
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What do you do with residual risk?• Remediate it – “Go to Green”• Monitor it• Ignore it (be careful of black swans)• Discover it (don’t forget the unknown)
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From where can you enter Op Risk Mgmt?•From IT•From Operations•From the Front Office•From business or change management•Right out of school
Where can you go to after Op Risk Mgmt?•To IT Management•To Operations Management•To Front Office Risk•To Senior Management
Risk is sexy because it offers you so many career opportunities
RISK = SEXY
•MONEY & POWER•EXPERIENCE THE TOTAL FIRM•CHALLENGING WORK•CAREER OPPORTUNITY