Increasing Attention on Operational Risk

A number of recent high profile operational losses and the operational risk-specific capital charge under Basel II have focused attention on improving operational risk management methodologies, and on meeting Basel II operational risk standards.

Operational risk is a potent threat to financial institution P&L statements, second only to credit risk. Improved operational risk identification, measurement, pricing and control will have real impact on income quality, irrespective of regulatory compliance issues.

Establishing Best Practice for Operational Risk

Quadrant advises Financial Services Institutions on best practice operational risk management structures and techniques. These include:

• Drafting and incorporation of operational risk policies into the policy framework
• Operational risk governance, from the Board downwards
• Design and implementation of operational risk methodologies
• Operational risk assurance to ensure regulatory and internal compliance
• Quantitative techniques in operational rik measurement and loss prediction
• Allocation of regulatory and economic capital to operational risk
• Pricing for operational risk
• Improving cultural awareness, transparency and rigour in operational risk management
• Operational risk training