OSFI encourages institutions to consider including external fraud events in the definition of operational risk for risk management purposes. Operational risk management should be fully integrated within a FRFI's overall risk management program and appropriately documented. Operational risk is inherent in all products, activities, processes and systems. As such, the effective management of operational risk should be a fundamental element of a FRFI's risk management program.
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OSFI expects FRFIs to have a framework for operational risk management that sets forth mechanisms for identifying and managing operational risk Footnote 1. Understanding operational risks leads to better decision making through the observation and analysis of past operational risk events and the patterns of observed behaviour within the FRFI. In addition, a robust framework for operational risk management provides a mechanism for discussion and effective escalation of issues leading to better risk management over time and increased institutional resilience.
The comprehensive data collection which the framework supports allows for analysis of complex corporate-wide issues and facilitates tailored risk mitigation actions. Additional tools such as analysis of external events and scenario analysis can provide risk management value and discourage complacency in operational risk management. Operational risk management should serve to support the overall corporate governance structure of the FRFI.
The risk appetite statement for operational risk should articulate the nature and types of operational risk that the FRFI is willing or expected to assume. The purpose of having a measurable component is to indicate the level of operational risk that is considered acceptable within the FRFI. Escalation and reporting processes for breaches, or potential breaches, should be in place.
FRFIs should ensure effective accountability for operational risk management. A "three lines of defence" approach, or appropriately robust structure, should serve to delineate the key practices of operational risk management and provide adequate objective overview and challenge. How this is operationalized in practice in terms of the organisational structure of a FRFI will depend on its business model and risk profile. Appropriate accountability for the management of operational risk is essential.
A "three lines of defence" structure is one way to achieve such accountability.
For illustrative purposes, the roles and responsibilities of each of the three lines are described below. In determining what is considered an appropriately robust structure, both FRFIs and OSFI will consider size, ownership structure, nature, scope and complexity of operations, corporate strategy and risk profile. The business line — the first line of defence — has ownership of risk whereby it acknowledges and manages the operational risk that it incurs in conducting its activities. The second line of defence are the oversight activities that objectively identify, measure, monitor and report operational risk on an enterprise basis.
They represent a collection of operational risk management activities and processes, including the design and implementation of the FRFI's framework for operational risk management. The second line of defence Footnote 3 is best placed to provide specialized reviews related to the FRFI's operational risk management. The internal audit function is charged with the third line of defence. The third line of defence should be separate from both the first and second lines of defence, and provide an objective review and testing of the FRFI's operational risk management controls, processes, systems and of the effectiveness of the first and second line of defence functions.
The third line of defence is best placed to observe and review operational risk management more generally within the context of the FRFI's overall risk management and corporate governance functions. Objective review Footnote 5 and testing coverage should be sufficient in scope to verify that the operational risk management framework has been implemented as intended and is functioning effectively.
FRFIs should ensure comprehensive identification and assessment of operational risk through the use of appropriate management tools. Maintaining a suite of operational risk management tools provides a mechanism for collecting and communicating relevant operational risk information, both within the FRFI, and to relevant supervisory authorities.
OSFI recognises that the FRFI itself has the best perspective to determine its organizational structure, processes, and the extent of its use of tools Footnote 6 to achieve a robust level of operational risk management. FRFIs are encouraged to continue to develop and improve the tools they use to manage their operational risk and to monitor and adopt best practices in this area, as appropriate including prioritising enterprise wide Footnote 7 coverage. The objective of the use of operational risk management tools is to generate risk management value proportionate to the other risks faced by the individual institution.
OSFI recognises that the use of well implemented tools adds greater risk management value, and that FRFIs may have existing tools in place to collect and analyse information relevant for operational risk management. All tools may apply; however, the descriptions included should not be interpreted as a checklist to be used for compliance or audit purposes. The following sound practices are primarily for consideration by larger, more complex FRFIs. However, some of the practices are more widely applicable and may be helpful as concrete examples of industry practice.
The examples of emerging practices below are not exhaustive and do not represent a checklist or an end-point for supervisory or internal audit review. Discussions in these areas should focus on improvements in operational risk management, rather than focusing on compliance. An operational risk management framework can provide a unique mechanism for specific data requests by senior management leading to more comprehensive information gathering relating to complex organisational issues.
For example, if senior members of a FRFI are observing a particular type of operational risk event in one area of the organisation, it can be useful to collect information on whether similar events or patterns are occurring in other areas i. Decision making at the highest levels of an organisation benefits from more complete information. Operational risk management frameworks are designed to permit the collection of information in specific areas across business lines on an enterprise wide basis.
In larger organisations with well-established second lines of defence, the information collection and aggregation capabilities of these professional groups can lead to better problem identification and thus more comprehensive and longer-term solutions to corporate-wide organisational issues. Within FRFIs, the documented framework for operational risk management may consider the following elements:.
Within FRFIs, the first line of defense may be responsible for developing capabilities in the following areas:. Depending on the size and complexity of the financial institutions, the first line of defense may be further divided between '1a' and '1b Footnote 10 ' roles. OSFI recognizes that the nature, size, complexity and risk profile of different FRFIs will mean that the responsibilities of the second line of defence groups may overlap with those of the first line of defence. Further, the size and degree of independence of the second line of defence will differ among FRFIs.
For example, for small FRFIs with low operational risk exposures, objective overview may be achieved through separation of duties. In larger FRFIs, however, the second line of defence will generally consist of a separate function most often reporting into the risk management function. The second line of defence should have an appropriate level of sufficiently skilled resources and stature to effectively fulfill its responsibilities. Within FRFI's, examples of responsibilities commonly associated with the second line of defence include:.
Similar to the first line, the second line of defence may also be further divided between '2a' and '2b Footnote 11 ' roles. Objective Assessment is the process of developing an objective view regarding the quality and sufficiency of the business unit's operational risk management activities, including the identification and assessment of operational risks; identification and assessment of controls; assumptions; and risk decision e.
This includes providing challenge when appropriate. Evidence of observable challenge may include both evidence of challenge integral to a process or evidence of challenge with supporting documentation at various stages of the process, as appropriate. Consistent with other areas of operational risk management, and risk management more generally, the level of documentation required should add risk management value and not be unduly distracting from overall risk management goals. Within FRFI's third line of defense for operational risk: objective review and testing activities generally involve testing for compliance with established policies and procedures, as well as evaluating whether the framework for operational risk management is appropriate given the size, complexity and risk profile.
Objective review and testing generally consider the design and use of operational risk management tools in both the first and second lines of defence, the appropriateness of objective assessment applied by the second line of defence, and the monitoring, reporting and governance processes.
The following are examples of operational risk management tools that have been used within FRFIs and may be useful:. A common taxonomy of sources of operational risk types aids with consistency of risk identification and assessment activities, and articulation of the nature and type of operational risk to which the FRFI is potentially exposed.
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An inconsistent taxonomy of operational risk terms may increase the likelihood of not properly identifying, categorizing, and allocating responsibility for the assessment, monitoring, and mitigation of risks. Risk and control assessments are one of the primary tools typically used to assess inherent operational risks and the design and effectiveness of mitigating controls within FRFIs. RCAs provide value through:. RCAs generally are completed by the first line of defence across the enterprise, including the various control groups, and should reflect the current environment but also be forward-looking in nature.
Resulting action plans emerging from completion of an RCA should be tracked and monitored to facilitate required enhancements being appropriately implemented. In addition, the second line of defence should review and provide objective challenge to the risk and control assessments, and the resulting action plans of the first line of defence.
Change management risk and control assessments establish a formalized process for assessing inherent operational risk and the appropriateness of mitigating controls when the FRFI undertakes significant changes. The operational risk assessments made as part of the change management process should generally be performed by the first line of defence.
This risk assessment process may consider:. A slightly newer approach to infrastructure which is rapidly growing in popularity due to its increased flexibility, is the use of multiple interconnected services. This would involve having a few different tools which specialise in different parts of your ContentOps process.
For example, authoring, publishing, and analytics would be three separate but integrated tools. Many organisations choose to have a separate tool for managing and distributing assets and media. You need project management capabilities to enforce a production workflow for different roles and permissions.
Your content needs to be able to get in front of your audience, so you need tools for publishing content to different channels — likely a CMS and marketing automation services. You need tools that can tell you how well your content is performing, and also to help govern it on an ongoing basis.
These could be basic analytics services or more advanced digital quality management tools. An undoubtably fluffy component, but worth highlighting — you need to be able to collaborate. Really, you need to be able to have multiple teams collaborating across your organisation, with shared goals. We recently collaborated with Ellen de Vries to publish a book on this subject.
Bolting on some of these improvements under the guise of content marketing, or strategy, or as part of a digital first objective can make their business value much more apparent. GatherContent is the best possible means to getting everyone in your organisation creating effective content. We are used as an essential part of a ContentOps infrastructure, delivering;. Since all of our functionality is available on a public API, we can be connected seamlessly to your publishing and analytics tools.
Giving you everything you need to break down silos, and get even the least technical people in your organisation creating neatly structured content in a simple workflow.
Sign up for a free trial and take a look. Being aware that many of the challenges with content exist out-with the tools themselves, we also publish a lot of educational content on the more human side of ContentOps. Check out our blog or resources to learn more.outer-edge-design.com/components/kegunaan/4309-app-to.php
Introductory readings in Operations Management - TOMI Portal
GatherContent is a game changer. Our content processes used to involve an ineffective mix of spreadsheets, documents, and a slew of file storage solutions. Version control was a nightmare and proofing was always an afterthought. With GatherContent we've solved all of these process problems and more, and we can now start the content process earlier. To top if off, our clients love it too.
Use cases. Website Builds Untangle your content workflow to launch websites on time and in budget. Website Content Create a frictionless approval process to maintain your website content. Marketing Content Centralise the creation of your marketing content. Imagine being able to produce content that meets user needs and business goals.
Every day. As Deane Barker summarises it:. Process, infrastructure, and probably some human beings. What could possibly go wrong? Why we need dedicated ContentOps A need to create quality content A clearly defined workflow and quality assurance process are essential to ensure quality is maintained throughout the content lifecycle. Faster content creation The need to reactively create content based on an unforeseen event is ever more common. Demand for a greater volume of content Audiences expect content to exist for all of your products and services, across multiple channels.
Style guides: Creating a content style guide for your authors will ensure content is consistent and authentic.
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Production workflows: Content production workflows can be as simple as a series of steps a single piece of content has to go through in order to be produced. Typical ContentOps infrastructure As well as these softer processes, there is a requirement for some solid infrastructure in order to create, maintain, and measure content across multiple teams. Authoring environment Some kind of authoring environment for creating and editing content. Inventory An organised content inventory or central repository for content to be accessed.
Asset management Many organisations choose to have a separate tool for managing and distributing assets and media. Project management You need project management capabilities to enforce a production workflow for different roles and permissions.