Risk Management Solutions for the Real World

The main objective is to strengthen the soundness and stability of the corporate structure.

A key requirement is operational risk management.

Operational risk is defined as risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events

Driven by stricter compliance requirements, it is in the interest of any corporate enterprise, financial institution or government body to monitor its risk and thereby secure its future. Failures to closely observe and handle such risk can lead to business losses and greater regulatory attention. If allowed to continue, such failures can bring down the entire organization.

Sensitive risk management is the key to future growth.

In the past, companies have too often regarded risk management as a cost factor, as a question of “insurance” rather than opportunity. Seen this way, risk management easily slips down the list of priorities and has no direct relationship to the lines of business. In fact, it is often seen as an interruption of business procedure.

Yet sensitive risk management is the key to future growth. Identifying and effectively managing risk brings to light potential loss factors and reveals inefficiencies affecting the organization.

The challenge that institutions face today is not so much to implement risk management as a regulatory procedure but to filter the information and transform it into useful knowledge for the enterprise as a whole.

Most credit and market risk parameters are fixed and defined whereas operational risk is more dynamic. It cannot be easily modelled because its environment is in constant change.

The best approach lies in having real knowledge…

Rather than a reactive response to periodical risk indicators, a truly effective operational risk system would provide a proactive, creative approach to risk management.

The existing machinery of risk management frequently creates a mindset whereby indicators of risk are too easily hidden. As has been seen in the much publicised corporate governance catastrophes of the last few years, traditional risk management methods are not enough on their own.

A far better approach is to embed dynamic risk management into a company’s ongoing business operations and systems with responsibility for this important task accepted by both senior and line management.

By linking enterprise-wide risk management and its reporting with operational information on a continuous basis, a living risk model is produced with many more benefits than those derived from traditional risk management.

The best approach lies in having real knowledge to provide not only safeguards against the various risk factors but also offer management useful information it can put to good use on a daily basis.

The ideal operational risk management system would provide a company with an enterprise-wide, customized, dynamic view of its risk and operations on a day to day basis.

...the right information to the right individual at the right time.

It is important for the system to record risk events and not just losses. It would have an event database that would link internal loss event data to the drivers and causes of risk. All gathered information would then be pooled centrally via multiple databases through a risk-based rules engine.

This “red flag” warning approach would allow one to see and handle potential risks before they were a real threat to the company.

The system would monitor the vital signs of an organization through tracking of key risk and key performance indicators. It would store physically as well as electronically-captured events on a daily basis. All data would be kept confidential with state of the art tools to manage enterprise security.

The system should have an accurate and up to date dashboard that allows risk managers and senior management to monitor and track incidents for immediate attention. Corrective actions must be action-planned with a responsible person, due date, and penalties for non- compliance.

It must correlate the right information to the right individual at the right time and produce a real picture regarding what is happening in the organization on any given day.

A further concept is that of drill-down/data-mining. The ideal system should provide the opportunity to drill down into historical data to allow managers to see where things have improved; what changes were made and when; and what further controls might be needed.

Guideline provides a risk management system that incorporates all the necessary factors mentioned above. This system, RUBI, operates by monitoring the vital signs of an organization, and gives a real time living risk model on an enterprise-wide basis.

The RUBI system is a tool for compliance standards and is already implemented in major financial institutions and corporations around the world. It produces a real window of truth as to what is happening within the ever-changing risk landscape on a day to day basis, and gets the information to the proper person.

RUBI gathers all information into a risk-based rules engine to highlight all potential operating risks before they can develop into full scale emergencies.

The main difference between RUBI and other risk management systems is the reporting of operational information on a continuous basis. The system can generate up to the minute reports at any given time.

With this integrated infrastructure, data sources that had not been previously considered to hold key risk information are now being monitored to identify potential threats.

RUBI is flexible enough to fit into every business type and to grow, bend and mould to an ever-changing landscape.
While an off-the-shelf package may get things started it is not going to fulfill risk management needs over the long term.

The conditions of a risk environment in any business are never static; therefore the system one implements to manage that risk must be dynamic.

The RUBI system has been developed to provide any company or financial institution with an enterprise-wide, customized view of its risk and operations on a day to day basis. RUBI complies with the requirements of Sarbanes-Oxley, Basel II and local/global compliance standards.

For more information regarding the
RUBI system:

Contact - Guideline Risk Technologies
Email - info@guidelinerisk.com
Website – www.guidelinerisk.com