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Operational Risk

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by

Tavis Wong

on 1 December 2013

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Transcript of Operational Risk

Technology Risk
- Risk is widespread, applicable to nearly every business in the world

- Financial costs can be attached to the failure of technology


Oversight Risk
Process Risk
- Processes by which firms operate must be evaluated / stress
tested

- Lack of supervision in the financial system contributed to
Financial crisis

- Incentive misalignment




Operational Risk
By: Daniel Dai
Tavis Wong
Josh Shi
Serena Song

OUTLINE
- What is it?

- 3 types of risk : Technological, Process, Oversight

- How did the risks relate to the Financial Crisis of
2007-2009?

-What is being done to mitigate each type of risk?


Insufficient Knowledge of the board

Unsupportive corporate environment

Insufficient Knowledge of the Board
Unsupportive Corporate Environment
- Risk Mandate

- Risk Culture

- Ex. How Goldman Sachs overcame the Crisis

"WE HAVE MET THE ENEMY AND HE IS US ..."

- Internal Fraud

- Clients, products and business practices

- Board oversight


Internal Fraud
Internal Fraud
- tolerance of fraud creates a pathogenic environment

Clients, products and business practices
- Most common
operational risk category

- Double whammy

- Calls for effective oversight mechanism


- consulting services to minimize technology risk
Technology's role in the Financial Crisis of 2007-2009
- software programs are used to make automatic trades

- algorithms used by the software to evaluate risk were inaccurate
Dodd-Frank Act
- The main goal of the Act is to prevent another
Financial Crisis from re-occurring
- Consumer Financial Protection Bureau
In Conclusion......
Thanks for Listening!
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Operational Risk: It's Impact On Individuals, Corporations, and the Economy
Full transcript