Recognizing key external and internal issues which could develop into significant risks for an institution can prove a daunting task. J. David Thompson, Managing Director and Chief Operational Risk Officer at Bank of New York Mellon, offered attributes to help identify emerging risks: newly developing or changing; difficult to predict timing or magnitude; and potential for major impact. The sources of emerging risks can come from world events, economic events, technological events, industry events, as well as internal events.
Thompson offered tools that his group uses to help identify emerging risks. At the process level, RCSAs are employed; while at the business unit level, high level assessments are conducted quarterly. Additional tools include company-wide data studies, stress testing, scenario analysis, and a listing/discussion of top ten risks conducted twice a year.
Once identified, managing the risks involves prioritizing the highest impact areas, utilizing effective project management, coordinating actions across silos, and monitoring and making thoughtful adjustments when necessary.