The aim of our survey was to map the progress and identify outcomes achieved by the participants who are working towards an umbrella approach to operational risk.
Participants are at various stages of the journey, which for most has started in the last two to four years. For some, the decision to adopt an umbrella function was driven by a need to reduce duplication. For others, it was driven by the adoption of new technology, or even challenge from the regulator.
What benefits does the umbrella bring?
There was consensus on the benefits achieved by moving towards a more coherent view of risk. Most participants noted that adopting the umbrella approach resulted in a degree of consistency, efficiency, effectiveness and agility. Several institutions mentioned the truer, clearer data which was generated, and which for some provided validation of the project at an early stage of implementation. Closing control gaps also proved to be a major benefit.
“We used to spend meetings discussing the data, we now spend them discussing what the data tells us…”
Umbrella study participant
While it may result in efficiencies, many found the primary aim of the umbrella was a qualitative improvement in risk management practices. Providing senior management with consistent and complete risk information was one of the strongest and most consistently reported benefits. This is essential for managing the enterprise-wide risks that are confronting firms today in a rapidly changing environment, and to provide solutions for identifying and tackling them.
Still some way to go
The transition to an umbrella is a logical response to the new issues facing operational risk, and a way of building a solid and permanent basis for operational risk challenges to come. However, many of the participants observed that their firm was at the beginning of its journey, and they expected the process to be long and complex.
