Efficient management of operational risks

Operational risks are associated with nearly every business activity. For years, the focus of business and regulators has increasingly been shifting on to these risks, not least because of high and, in part, spectacular losses. The increasingly complex business in the area of financial services has strengthened this focus.

OpRisk models, processes and products

For many years now, SKS Advisory has had excellent regulatory knowledge, which is based on the experience of users and former members of supervisory authorities. Our staff have thorough knowledge of the models, processes and products in the field of operational risks in both the banking and insurance environments. SKS has particular modelling experience in the field of Advanced Measurement Approaches (AMA) and works together with partners in the area of model development. However, for companies seeking to realise the standardised approach (TSA), SKS can also offer solutions for the implementation of both the process aspects and also the software aspects. Our in-house IT partner, interexa, is a leader, in the German speaking market, for software development for operational risks.

In the application of the AMA, it is the interplay of the individual processes and their link to the calculation of risk capital that is especially important.
An example which fulfils the current AMA requirements can be seen in the diagram below:

The risk capital is calculated on the basis of the company-internal loss data, external loss data as well as data from scenario analyses.
Scenario analyses assess potential serious risks that could materialise - particularly with respect to the amount of losses.
In order to be able to react more quickly to changes, over the course of the year, there is also the option to include, in the model, risk indicators that can be monitored more easily and more quickly.