Operations Risk Management at a Major Bank

Abstract

Risk management decisions are among the most conceptually difficult ones faced by managers. Financial institutions depend upon their operations and may incur considerable losses if those operations are interrupted. We participated in the development and implementation of an operations risk management program in one of the nation's largest banks. We developed a methodology, based upon decision analysis, as a framework for making risk management decisions. The bank implemented an ongoing corporate-wide contingency-planning program for all operation's services, using the risk management methodology to analyze operational risks in a probabilistic environment. This program, implemented prior to regulatory mandates, remains an industry leader for over a decade.