RSS feeds[QQ]A recent PricewaterhouseCoopers study has revealed significant investment, innovation and commitment in operational risk management by the financial services industry, as banks seek to reduce losses and implement better controls for their businesses.[QQ] PwC worked with ABN AMRO, Barclays, Chase Manhattan, Deutsche, ING, JP Morgan and UBS to benchmark capabilities and identify leading practices.[QQ] PwC partner Hans-Kristian Bryn said: "The commitment to operational risk management by board members is impressive. They are taking an active role in communicating its commercial importance and promoting new approaches for more effectively managing the risks."[QQ] This commitment is being illustrated through an increasing investment in operational risk management. For example, one bank stated that it plans to spend $16m on specific operational risk initiatives (such as risk assessment, reporting and measurement) in 1999. This is in addition to ongoing systems, control and process improvements in areas such as Y2K and e-commerce.[QQ] The study showed that improved risk practices are leading to tangible benefits, which include reduced losses, increased control and awareness, more effective decision making and competitive advantage.[QQ] The study also found that a key priority for the boards of leading financial institutions is measuring operational risk for capital allocation and performance measurement purposes. Greater regulatory pressure and high profile industry losses are the other major reasons cited for an increased commitment and focus on operational risk.[QQ] David Gittleson, a PwC director said: "Many of the practices used are at the forefront of the industry. For example, new reporting processes give managers greater insight into the key operational risks facing the organisation."[QQ] PwC has identified principles for the more effective management of operational risk. These include using risk units and managers to perform key responsibilities in a cost-effective manner.
