Source: Institute of Operational Risk
The Institute of Operational Risk (IOR) has published the second sound practice guidance paper in its new series on the topic of Risk Control Self Assessment.
Designed to provide advice on the implementation of the techniques that support a robust risk management framework the guidance papers focus on the practicalities, rather than the theory, of application.
Risk Control Self Assessment (RCSA) should form an integral element of an organisation's overall operational risk management and control framework. It provides an excellent opportunity for a firm to integrate and co-ordinate its risk identification and risk management efforts and to improve the understanding, control and oversight of its operational risks.
The IOR guidance paper highlights the benefits of a well-designed and properly managed RCSA programme; the generic characteristics of an RCSA approach; the three key approaches to performing an assessment; how to use the assessment to enhance an insight into a firm's operational risk profile; post RCSA exercises and how this can strengthen the engagement with an internal audit function.
Philip Martin the IOR Chairman says:
"The ability to provide a coherent, integrated view of the operational risk profile of an organisation is essential in today's regulatory environment. The more the individual components of the operational risk framework provide consistent indicators of where the risks of the firm lie and the likelihood and severity of possible events, the better the effectiveness and the operation of the overall framework will be. This new RCSA sound practice guidance paper 'brings to life' how all of this can be achieved."
The paper begins with an initial overview of the origins of RCSA, then goes on to outline the 'value add' (i.e. selling point characteristics) and includes a basic overview of operational risk terminology generally used in RCSA).
"However, more fundamentally" comments Philip Martin, "this paper provides a 'hands on' guide on how to implement RCSA within a business (whether this be private or public sector) and includes model example data capture templates / reports.
"Ass such, this paper is ideally suited for those who are at the 'front line' of rolling out RCSA within an organisation, irrespective of sector and provides great 'hints / tips' plus impartial 'pros and cons' evaluations throughout."
The IOR's first sound practice guidance paper - Risk Appetite - was launched in January; further papers in the series will be published during the year. The papers are available, free of charge, from the Institute's website at www.ior-institute.org