Operational risk and implementation

Operational failures are responsible for far more losses than poor investment decisions. It is therefore critical to perform a thorough operational risk assessment and ongoing monitoring of the processes. A successful implementation of a Risk Management Process requires a robust operational framework.

In addition, it is key to clearly define responsibilities for monitoring the various risk components and that the staff responsible have adequate experience and expertise to calculate, review and analyse the various risk reports. It is also critical to define a framework for escalating and acting in case of any limits warning or breach.

To ensure that there is no potential conflict of interest it is important to define who sets the risk limits and ensure that the risk monitoring function is independent from the investment management function. It is also key that the operational process supports the requirements for the various calculations and any system needed to support the risk monitoring and independent risk assessments.

For further information about our Risk services please contact Pierre Bourlatchka in London or Benoit Andrianne in our Luxembourg office .