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| Operational Risk Management Reporting Template Excel - Free Download |
Operational Risk Management Reporting Template Excel - Free Download
Reporting is a very important tool in the management of operational risks because it ensures timely escalation and senior management overview. The process of monitoring and tracking operational risks should analyze and indicate the current and future operational risks.
It should focus on considering measurements based on the large amount of information data already existing in financial organizations. Operational risk monitoring should refer to all those parameters and information related to risk causes, events, consequences, probability, and impact. Moreover, monitoring of the risks ensures that the threshold values are adhered to.
If these threshold values are exceeded, then the contingency plans are initiated. Operational risk management has the primary responsibility of establishing and monitoring all aspects of the organization’s risk assessment and prevention activities.
Operational risk management reports must address both organization wide and line of business results. These reports must summarize operational risk exposure, loss experience, relevant business environment, and internal control assessments, and should be produced on a quarterly basis.
Operational risk reports must also be provided periodically to senior management and the board of directors, summarizing relevant organization wide operational risk information. Ongoing monitoring of operational risk exposures is a key aspect of an effective operational risk framework.
To facilitate monitoring of operational risks, results from the measurement system should be summarized in reports that can be used by the organization wide operational risk and line of business management functions to understand, manage, and control operational risk and losses. These reports should serve as a basis for assessing operational risks and related mitigation strategies and for creating incentives to improve operational risk management throughout the organization.
Operational risk management reports should summarize:
- Operational risk loss experiences of an organization, line of business, and event type basis
- Operational risk exposures
- Changes in relevant operational risk and control assessments
- Management assessment of early war Ning factors signaling an
- Increased operational risk of future losses
- Trend analysis, allowing line of business and independent organization wide operational risk management to assess and manage operational risk exposures, universal line of business risk issues, and other corporate risk issues
- Significant operational risk exceptions
- Corporate governance exceptions
- Real-time incident reports
High-level operational risk reports must be produced periodically to be reviewed by the board and senior management. These reports must provide information regarding the operational risk profile of the organization, including the sources of operational risks both from an organization wide and line of business perspective, versus established management expectations.
Operational risk reporting should work at two levels: internal and external. Internal reports are accessible to senior managers and the board of directors, and they should be able to receive, at a more corporate level, regular reports on financial, operational risk, and compliance data. External reports should include external market information about events and conditions that are relevant to operational risk management decision making.
The results of monitoring activities should be included in regular management and board reports, and the reports should fully reflect identified problem areas and should motivate timely corrective actions on outstanding issues.
Operational risk management should ensure that information is received by the appropriate people, on a timely basis, and in a form and format that will aid in the monitoring and control of the business.
The reporting process should include information such as:
- The board and executives to determine that the delegation of risk management duties have been effective and their requirements for operational risk management are being met
- The overall operational risk profile to be evaluated against the organization’s risk strategy and appetite
- Key risk indicators to be monitored and the need for corrective or preventive actions to be assessed
- Business line management to confirm that controls over key operational risks have been executed successfully and that failures and “near-misses” have been understood and assessed
- Evaluating the levels and trends of operational risks and their effect on business performances within business lines
- Understanding the effect on the business objectives and the financial and economic impact stemming from operational risks
- Evaluating the reasons for key assumptions in the capital planning process
- Determining the allocation of resources for managing the risks in operations
- Evaluating capital requirements based on a bank’s evolving operational risk profile and whether any changes to the plan are necessary
- Proposing suggestions for operational risk management and decision making
- Having a clear picture concerning operational risk management issues
- Consistencies, that is, there is consistency between assessment of the risks in operations and the actual operational risks faced, in which case the operational risk management system should proceed as planned.
- Variances, there is a variation between the assessed operational risk with actual operational risks, in which case corrective actions in this area of risk control and management should be defined and implemented.
- Changeability, the operational risk management cannot handle particular operational risks due to significant changes of those risks, in which case major corrective and preventive actions in this area of risk control and management should be defined and implemented.
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