8028228075?profile=originalOperational Risk professionals are facing increasing pressures within the industry for better management, best practices and safeguards to be implemented throughout an institution. Since the financial crisis of 2007/8 Operational Risk (Op Risk) professionals have been in the spotlight, after the lack of proper management was attributed as a main driving force towards the crisis. Managers are facing an uphill battle against emerging risks evolving with the new technological world, while implementing and maintaining infrastructure and best practice to ensure compliance to changing Regulations.

CFP recently interviewed over 50 senior Op Risk professionals across Europe from the buy and sell side institutions to gain insight to the critical challenges Op Risk professionals are facing, both now and over the next 12 months. The results outlined below and in the New Generation Operational Risk initiative (London, March 2015, www.cfp-events.com/oprisk), identified three critical challenges correlating with increase in technology and regulatory standards.

CFP’s research distinguished a consistent recognition of three main challenges throughout the industry. Op Risk is moving away from traditional definitions of an all-encompassing umbrella, excluding Credit and Market risks. A key area identified as branching out of Op Risk into a separate silo is Conduct Risk. The received response from CFP’s research identified disputes as to where Conduct Risk now sits within the organisation - does Conduct now stand as its own silo and if so, who and how is this effectively managed? If this is the case, it brings up the question, where does one end and the other begin and to what extent does the Op Risk Manager address relevant conduct challenges without stepping on the Conduct Risk manager’s toes?

Alongside Conduct challenges, closely sits complying to the evolving regulatory requirements and balancing compliance against running the business and remaining profitable. Participants throughout the research identified the dispute between separate global and national regulators and interpretation of their expectations as a key challenge impacting in greater Op Risk picture. With regulatory requirements open to interpretation throughout the industry, and increased pressure from regulators on the Op Risk teams, it is increasingly harder to ensure compliance alongside practicality for the organisation.

A further critical challenge recurring throughout was Cyber Crime and concerns over technology. In a world of ever advancing technology, organisations are in a constant race with competitors to have the most up-to date technology and systems in place for customer consumption, and regulatory requirements. Vulnerability to cyber attacks and data breaches, even with IT frameworks and safeguards in place, are a constant concern. The ever-present challenge of staying ahead of cyber criminals is an increasing drain on capital and resources, as well as a challenge to gain buy-in from senior management and the Board, with many reputational fallbacks if proper safeguards are not in place.

Conduct Risk, Cyber Challenges and Regulatory Changes are increasing areas of concern within Op Risk and a few of the critical challenges being addressed by more than 20 senior Operational Risk experts at CFP’s forthcoming New Generation Operational Risk Management Congress.

Op Risk Brochure

For further information visit www.cfp-events.com/oprisk

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