Global Systemically Important Bank (1 of 29 banks in the world).
Financial institutions have several major hurdles in achieving the operational risk measurement and reporting requirements of Basel III including:
- Operational risk measuring and reporting within financial institutions is a fragmented environment with a proliferation of dispersant controls.
- The systems for measuring risk are in a large part reactive.
- Increasing numbers of specialized products and specialized IT systems add to the measurement disparity.
An operational risk measurement and reporting system was developed in compliance with Basel III. A methodology to assess, manage and mitigate operational risk was developed using quality improvement techniques. Numerical values for the level of process risk are converted to financial measurements. A dash boarding process allowed for operational risk data to be analyzed at multiple levels across business units,products, legal entities and risk categories.
Results & Benefits
- The ability to view and compile data across products & legal entities provides the ability to spot emerging risk trends.
- Enables the comparison of areas/franchises from an operational risk perspective and provides a basis for operational risk capital management.
- Provides the data framework for an operational risk management system to mitigate risk. Leads to compliance with the Basel III measurement and reporting requirements for operational risk.
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