Operational Risk SIG

Paul Saunders, co-Chair

The Operational Risk (OR) SIG has skewed membership towards the Banking Sector, which has seen well publicised and reported effects from Coronavirus. One thing we haven’t seen reported as much is how the sector is going to deal with being politically encouraged to shift its risk appetite. For example there will be businesses in need of finance (with or without government support/guarantees) that would not normally have met banking institutions lending policies currently in place. Whilst focusing on the Banking Sector, as alluded to above, the sectors ongoing financial support for businesses (negatively affected by the Governments restrictions to combat the pandemic) will need to go on for a sustained period of time. Potentially under terms that would have not have been normal for banking institutions before Covid–19, this in turn will put pressure on the Banking Sectors capital and operational processes. As a SIG that focussed on operational risk (and regulation), the key operational considerations we see are in respect of whether there will be a return to what we thought was normal working practices, or whether Covid–19 will have a lasting effect. For example remote working may now become the normality for some organisations, who have had to implement this and realised unforeseen benefits as a result. The role of OR Manager therefore is going to be brought more into focus as a result of this crisis, with a particular onus on Operational Resilience (including management of third parties). Thinking around this area of risk needs to be embedded in an organisations culture, to ensure that if/when another event with similar impact occurs, we have learnt the lessons from what we are currently working our way through. More information is available on the topic of Operational Resilience from the SIG chairs/members if required. It goes without saying that the more OR trained individuals there are in organisations the better, through the 1st, 2nd and 3rd Lines of defence.