Institutionalizing Operational Risk Management: An Empirical Study

2014 ◽  
Vol 29 (1) ◽  
pp. 59-72 ◽  
Author(s):  
Carol Hsu ◽  
James Backhouse ◽  
Leiser Silva
Keyword(s):  
Risk Management ◽  
Financial Institution ◽  
Technological Development ◽  
Operational Risk ◽  
Structuration Theory ◽  
Management Approach ◽  
Operational Risk Management ◽  
Operational Risks ◽  
Role Of It

This paper examines the development of operational risk management (ORM) in a financial organization, focusing in particular on the role of IT in institutionalizing the new regime. Through an interpretive case study in a major US financial institution, the paper uses Giddens’ structuration theory to examine how it adjusts to the demands of protecting itself against new operational risks. The discussion and results of our study are expressed in three propositions: (1) the regulatory context and technological development affect the shape and the outcome of ORM; (2) implementing ORM is a process of reflexive monitoring and transforming organizational practices in a financial institution; (3) the role of IT in ORM is contingent on the extant organizational structure and on the choice of risk management approach.

Role of Analytics for Operational Risk Management in the Era of Big Data

2020 ◽  
Vol 51 (6) ◽  
pp. 1320-1346 ◽  
Author(s):  
Ozgur M Araz ◽  
Tsan‐Ming Choi ◽  
David L Olson ◽  
F. Sibel Salman
Keyword(s):  
Risk Management ◽  
Big Data ◽  
Operational Risk ◽  
Operational Risk Management

scholarly journals Risk management as a social defence against anxiety

2012 ◽  
Vol 38 (2) ◽  
Author(s):  
Dirk J. Geldenhuys ◽  
Madia M. Levin ◽  
Annelize Van Niekerk
Keyword(s):  
Risk Management ◽  
African Country ◽  
Operational Risk ◽  
The Unconscious ◽  
Operational Risk Management ◽  
Doing Business ◽  
Managerial Implications ◽  
Value Add ◽  
Managing Risk

Orientation: This article deals with the unconscious role of risk management in an African country.Research purpose: The aim of the study is to describe how risk management unconsciously influences behaviour when doing business in an African country.Motivation for the study: Operational risk management is a rational management imperative. However, this does not take cognisance of the unconscious role of risk management. A systems-psychodynamic perspective might be particularly relevant if the anxiety implied in risk management is not appropriately contained. Awareness of these dynamics may provide an opportunity for addressing them and allow for a more holistic way of managing risk.Research design, approach and method: The researchers conducted the study as a qualitative case study in an African country. They used purposive sampling and analysed the data using qualitative content analysis.Main findings: Viewing risk management from a systems-psychodynamic perspective allowed the researchers to identify the influence of risk management on the behaviour of people. The emerging hypothesis was that, if businesses do not address the anxiety underlying risk management, managing risk becomes a social defence against the anxiety.Practical/managerial implications: Awareness of the anxiety involved in risk management may assist businesses to manage risk in a more realistic way, making provision for, and even capitalising on, the human element.Contributions/value-add: The article provides a systems-psychodynamic, and hence a more complete, perspective of operational risk management when doing business in an African country.

scholarly journals Roles and responsibilities for managing operational risk in a banking environment

2008 ◽  
Vol 5 (3) ◽  
pp. 34-46
Author(s):  
Jackie Young
Keyword(s):  
Risk Management ◽  
Operational Risk ◽  
Main Role ◽  
Banking Supervision ◽  
Operational Risk Management ◽  
Roles And Responsibilities ◽  
Global Institutions ◽  
Basel Committee ◽  
Operational Risks ◽  
Role Players

Operational risk management is one of the fastest growing management disciplines within a banking environment as a result of various disastrous international incidents. Subsequently, various global institutions got involved in order to ensure that the effect of similar events do not negatively influence the international industries, for example, the Basel Committee on Banking Supervision regarding banks. It is, however, a known fact that operational risks are difficult to manage, as it is not easy to quantify. Therefore, it is of the utmost importance to understand the concept of operational risk management and, more specifically, the actual roles and responsibilities of various role-players within an organisation. This paper aims to identify the main role-players involved in the management of operational risk in a banking environment and to identify their specific roles and responsibilities

scholarly journals Operational Risk Management in A Commercial Bank

2018 ◽  
Vol 7 (4.36) ◽  
pp. 524
Author(s):  
I. I.Vasiliev ◽  
P. A. Smelov ◽  
N. V. Klimovskih ◽  
M. G. Shevashkevich ◽  
E. N. Donskaya
Keyword(s):  
Risk Management ◽  
Development Strategy ◽  
Commercial Bank ◽  
Operational Risk ◽  
Strong Impact ◽  
Credit Institution ◽  
Operational Risk Management ◽  
Operational Risks ◽  
Empirical Level ◽  
Analysis And Synthesis

The existing financial and economic situation in the world and in Russia impacts the activities of all sectors of the economy, including posing challenges for banks. In the conditions of prolonged instability, the banking community has to pay great attention to the risks taken and to manage them. Among all the risks that the bank is exposed to, operational risks represent a separate group due to its specifics, a lack of a systematic approach to analysis and a lack of identification criteria requiring more detailed study. The operational risk is unique in that, although it affects virtually all areas of the credit institution, it is difficult to establish and separate it from other bank risks. It should be noted that every year there appear all new types of operational risk that have a strong impact on the activities of the credit institution due to the development of information and computer systems, the complication of the instruments of the stock market and the improvement of business methods. Therefore, regulators of all countries try to constantly improve the regulatory framework related to the management of the operational risk of a commercial bank, based on the recommendations given by the Basel Committee on Banking Supervision.The article is aimed at developing an effective system for managing the operational risk of a commercial bank.The empirical level research methods used in this article are a description of what operational risk is, its types, tools and methods of assessment; comparison of operational risk management systems in the studied banks; generalization, analysis and synthesis of the information received; the hypothetical-deductive method is used at the theoretical level.Modernization and improvement of the operational risk management system helps stabilize the bank, increase stability and increase profitability, reduce the provision of capital for operational risk, and increase the attractiveness of banking services for consumers, thus benefiting a credit institution among competitors. In today's financial environment, the effective operational risk management is inherent in the long-term development strategy. 

scholarly journals A proposed operational risk management framework for small and medium enterprises

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Micheline J. Naude ◽  
Nigel Chiweshe
Keyword(s):  
Risk Management ◽  
Small And Medium Enterprises ◽  
Relevant Literature ◽  
Management Strategies ◽  
Operational Risk ◽  
Management Framework ◽  
Operational Risk Management ◽  
Operational Risks ◽  
Risk Management Framework ◽  
Medium Enterprises

Background: The gap between small and medium-sized enterprises (SMEs) and large businesses that perform risk assessment is significant. SMEs continuously face many operational risks and uncertainties in their daily operations, and these risks threaten to reduce productivity, increase costs and reduce profits.Aim: The purpose of this article was to develop an operational risk management framework that SMEs can use to identify and analyse risks in their operations and take corrective actions to mitigate these risks.Setting: Small and medium-sized enterprises in South Africa do not view risk management as a key component of organisational success, despite evidence that businesses that adopt risk management strategies are more likely to survive and grow.Methods: The article is exploratory in nature, and a conceptual analysis approach was used to formulate the framework. This study reviewed relevant literature sources on risk published between 2002 and 2017.Results: The four process steps of risk management were used as a reference point and form the foundation for the operational risk management framework. The categories of operational; marketing; technical and financial risks were identified from a review of available literature on risk management.Conclusion: There is a dearth of research that deals with operational risk management frameworks for SMEs. The expected contribution of this article, therefore, is twofold: firstly, it is envisaged that managers or owners of SMEs could use the proposed framework as a tool to appraise and minimise their operational risks; secondly, it will add to the current body of knowledge on risk appraisal for SMEs.

scholarly journals Danske Bank—A Smorgasbord of Risks

2020 ◽  
Vol 2 (3) ◽  
pp. 1
Author(s):  
Patrick McConnell
Keyword(s):  
Risk Management ◽  
Money Laundering ◽  
Large Scale ◽  
Financial Institution ◽  
Operational Risk ◽  
Initial Report ◽  
Study Approach ◽  
Operational Risks ◽  
Terrorism Financing ◽  
To Come

In September 2018, Danske Bank, the largest bank in Denmark and one of the largest in the Nordic region, published a report which detailed that the bank’s board had fallen into lapses in Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) policies at the bank, in particular, within its Estonian subsidiary. The report was devastating in its criticism of AML processes in the Estonian branch, stating that, over a period of several years, “all lines of defence failed” to manage money laundering risks. Soon after the publication of this report, the CEO of Danske resigned, causing the details of the underlying scandal to become public knowledge (although some the issues involved had been aired publicly on a number of occasions previously). It was also revealed that the bank had become the subject of criminal investigations by US authorities. While the events that are covered in the initial report related to failures to manage AML risks, the situation is more complex than merely deficient AML controls in a remote branch. There was a failure to manage a smorgasbord of different types of risks at both the local and group (i.e., headquarters) level, including: strategic risks; technology risks; and especially operational risks. As befits a sophisticated modern financial institution, Danske Bank operates a group-wide enterprise risk management (ERM) framework covering multiple types of risk (credit, market operational, etc.). The fact that the failure to manage the AML risks took several years to come to light casts doubts on the efficacy of their ERM framework and its implementation. Using Turner’s case study approach, this paper considers the Danske Bank case from the perspective of operational risk management with a view to identifying lessons that can be learned from the scandal that can be applied to future, large-scale operational risk events.

Collaboration Methods and Tools for Operational Risk Management

2011 ◽  
pp. 68-73
Author(s):  
Jürgen H.M. van Grinsven ◽  
Marijn Janssen ◽  
Henk de Vries
Keyword(s):  
Risk Management ◽  
Operational Risk ◽  
Expert Judgement ◽  
Research Issues ◽  
Operational Risk Management ◽  
Future Developments ◽  
Elicitation Process ◽  
Multiple Experts

In this article, collaboration methods and tools are discussed for supporting multiple expert judgement issues. First, an overview of ORM will be provided by discussing the main phases of ORM. Second collaboration methods and tools are presented that can be used to support the multiple experts’ judgment and elicitation process and the role of experts is discussed. Finally research issues are discussed that need to be solved to leverage the full advantages of collaboration methods and tools as well as future developments.

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