Chief operational risk officers at four major banks shared their concerns and experiences during a panel discussion that wrapped up RMA’s GCOR VI conference. Panelists were Robin Phillips, managing director, corporate operational risk executive, Bank of America; Jodi Richard, EVP and regional head of Operational Risk and Control, HSBC North America; Beth Rudofker, managing director, Corporate Operational Risk, JPMorgan Chase; and Kevin Slane, EVP, Enterprise Risk Management, First Horizon.
Among the top-of-mind priorities described by the COROs are breaking out of risk discipline silos to provide a coordinated, enterprise-wide look at risk, managing increased operational risk demands in a cost-constrained time, making best use of senior management attention to risk, providing useful data and fostering dialogue with the business lines, and keeping staff fresh and engaged with risk priorities.
Phillips said his bank’s operational risk management efforts are at a mature stage, although the operational risk discipline is still at an immature point. Richard said her bank’s operational program has advanced to the point where they can focus on managing operational risk rather than putting in place metrics and tools to do so.
According to the COROs, operational risk plays a large role in new product development and approval, in some cases directing the process. Operational risk also has a voice in long-term planning and strategy.
Richard says HSBC includes two operational risk measures in scorecards used to determine compensation, including operational risk losses and operational risk effectiveness.
Banks are encouraging and monitoring business line managers to self-identify risks in their areas rather than having them discovered by the second or third line of defense—risk management and audit, respectively.
According to Richard, the biggest operational risk objective in the next two to three years is to reduce operational risk losses by inserting controls that will lower the number of events resulting in losses. Phillips and Slane are working on getting usable risk data to the business lines.
RMA would like to thank this year’s GCOR VI sponsors: Wolters Kluwer, AFS, Algorithmics, Centerprise Services, KPMG, MetricStream, and Protiviti; and exhibitors: BWise, IBM, and Logic Manager.
We look forward to seeing you next year for GCOR VII, April 17-18, 2013 at the Hyatt Regency Cambridge in Boston, MA.