avantage Edinburgh - Operational Risk Appetite: Turning a "black art" into practical reality
On Friday 24th June 2011, avantage hosted the second of its diet of breakfast seminar roundtable events in Edinburgh. This session introduced the topic of Operational Risk Appetite. In this session we focused on the practical challenges that are likely to be encountered when producing an operational risk appetite.
In the first presentation, Andrew Shiels, Head of the Edinburgh Practice, avantage, provided an overview of the key issues and considerations to take into account when defining and introducing an operational risk appetite framework.
Andrew introduced the topic and went on to discuss some of the key considerations, including the linkage to the overall strategy of the firm and the importance of recognising the input and perspectives of the different stakeholders involved. The different options available for expressing operational risk appetite were also discussed along with the overall benefits to be gained from having a well-defined operational risk appetite.
A comprehensive roundtable discussion ensued on the challenges that had been faced by a number of the attendees and the need for effective buy in to the process from senior management.
In the second presentation, Fred Bell, Head of Operational Risk, RBS Wealth, provided practical observations on developing a risk appetite framework. This included examples of risk appetite statements and a process driven approach to cover off customer, operational and support driven activities.
The morning’s discussions were concluded with further roundtable discussions. A lively debate around the practical approaches that could be followed to define and implement an effective operational risk appetite provided further insight into some of the potential pitfalls to avoid and the lack of a “one size fits all” approach. It was widely agreed that the area of operational risk appetite is not an exact science and the groundwork required to ensure that all aspects of risk and governance are considered should not be underestimated.
You can download a copy of the speaker presentations here.
Of further interest may be our Practice Note ‘Developing an Operational Risk Appetite: Turning a “black art” into a practical reality’, a copy of which can be downloaded here.
