Scandizzo highlights the requisite set of skills and competences that a successful operational risk manager must possess and discusses the key requirements of the role, such as how to: write an operational risk policy; develop strong working relationships with senior management, front and back office staff, IT, compliance and audit professionals; advise management on the identification and mitigation of operational risks; embed a culture of risk management throughout the business; and develop, maintain and review a risk management framework. Written from the perspective of an operational risk manager, the focus of this report is always on describing practical ways to get the job done, backed up with real-life examples of everything that is discussed. It provides you with a solid understanding of the tools and techniques of identifying, managing, reporting and monitoring operational risk. It looks at current developments affecting the role of the op risk manager such as Basel II, capital measurement and allocation, and concludes with an assessment of how the op risk manager's role is likely to evolve within the next 15 years.
This concise, practical report talks to practitioners in their own language with plenty of identifiable examples of day-to-day scenarios. This is essential reading not only for operational risk managers and analysts but also management consultants, internal and external auditors and compliance officers looking to move into this area or needing to learn more about the op risk manager's role.
Sergio Scandizzo is head of the Operational Risk Unit at the European Investment Bank (EIB) in Luxembourg. Prior to his position at the EIB he was senior manager in the London office of PricewaterhouseCoopers and, prior to that, a senior manager of the Operational Risk Group at the Canadian Imperial Bank of Commerce in Toronto. He holds degrees in computer science and finance. Sergio was a contributing author to the award-winning Risk Books title Advanced Measurement Approach to Operational Risk, edited by Ellen Davis. He is also the author of several journal papers on the subjects of fuzzy logic, genetic algorithms and risk management.
PROLOGUE: THE JOB INTERVIEW PART I. THE JOB DESCRIPTION 1. A DAY IN THE LIFE Key Risk Indicators Meeting with Internal Audit Briefing the CRO Videoconference Message from the supervisors Study on third-party liability Presentation New product approval 2. THE OPERATIONAL RISK FUNCTION Do I have to manage anything? A place in the sun Are you "adding value"? PART II. TOOLS OF THE TRADE: LIFE UNDER BASEL II 3. RISK MANAGEMENT FOR BEGINNERS: THE OPERATIONAL RISK POLICY Definitions Risk appetite Roles and responsibilities The operational risk management framework 4. RISK IDENTIFICATION Objectives of risk identification A methodology for risk identification and mapping Case studies Conclusions 5. RISK ASSESSMENT Measurement and capital allocation The Basel II approaches to operational risk measurement The advanced measurement approaches 6. RISK MONITORING AND REPORTING Reporting operational events and losses Reporting Key Risk Indicators Reporting VAR PART III. SPECIAL TOPICS IN CALAMITY PHYSICS 7. THE MANAGEMENT OF EXTREME RISKS Risk definitions Scenario analysis for extreme events The high-reliability bank Business continuity vs. disaster recovery 8. FINANCIAL AND OTHER DISASTERS Three case studies Tales of the Titanic The battle for Singapore EPILOGUE: OPERATIONAL RISK MANAGEMENT IN THE YEAR 2020