Operational Risk Management

MNK Risk Consulting > Operational Risk Management

Understand your exposure to operational risk

The global financial crisis underscores the significant improvements required of firms’ risk management capabilities and structures. While credit and market risk have been the focus of public attention, operational risk management programs have received the attention of business leaders. Attention to operational risk stems from the multi-billion loss operational risk events that took place in international banks over the recent past and which constitute a reputational threat.

Strong operational risk management programs and management information systems can identify inherent business risks proactively and protect business reputation. Loss of data, employee-related litigation, poor client expectation management and transaction miss-execution also draw negative attention and can be addressed proactively to a large extend.Operational risk management, because of its breadth of subject matter and complexity of interrelationships across subjects, poses a significant challenge. It is difficult to anticipate and manage risks, including potential failures in people, processes or technology; internal control failures; and fraud or unethical behavior.  It is also difficult to balance having sufficient capital buffers to absorb the financial impact of adverse events without tying up capital unnecessarily. Our firm is well-positioned to work with clients in this complex, multifaceted area.  Our international long experience and expertise in operational risk management and capital measurement means we bring together hands-on industry experience with regulatory expertise. We offer our clients lessons learned from our past experiences and our knowledge of current market best practices.


Our professionals advised numerous clients across the full spectrum of operational risk management and measurement issues, including

Assessing operational risks in new products, and providing innovative solutions on improving clients’ identification of and preparedness for emerging risks

Evaluating operational risk management frameworks, including risk definitions, risk appetite, policies and procedures, loss event capture, and reporting

Advising on and developping operational risk measurement models, stress testing methodologies, and other components of capital calculation, including Operational VaR models

Factoring operational risk into product pricing and risk-adjusted performance measures

Linking the output of an op risk management framework to action planning and business decision making

Helping clients qualify for the Advanced Measurement Approach and save on capital requirements

Aggregating op risks across business lines and risk categories

Implementing Operational Risk Control Self-Assessment (RCSA) and producing internal control effectiveness measures and other forward-looking operational risk management information. Such exercise includes Information and communication technology (ICT) risk and security risk management

Linking RCSA output to an AMA model input

Rationalise insurance programs so that can be used as operational risk mitigants 

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