Chapter 11: Root Cause Analysis and Action Plans Flashcards
Why are Root Cause Analysis so important?
What are the 4 key features?
- True cause identification
- Long term solutions (not temporary fixes)
- Recurrence reduction
- Operational efficiency
What are the Best Practices for Implementing Action Plans?
There are 5, simple and clear…..
- Clear communication, esnure understood
- Resource allocation
- Ongoing training and support
- Continously monitor and adjust
- Detailed documentation
What are some effective practices for monitoring and reviewing action plans?
- Schedule Regular check ins
- USe Key performance indicators (KPI)
- Establish feedback mechanisms
- Continuous improvement
What is a key practice for managing operational risk events according to the BCBS?
Establishing an internal threshold for exhaustive root cause analysis of operational risk events by the first line of defense, reviewed by the second line.
What role does the operational risk management function play in root cause analysis?
It provides guidance and a standardized template to ensure a consistent approach across business lines.
What is the bow-tie analysis tool used for?
It is used for root cause analysis, identifying direct and indirect causes and impacts of operational failures.
What can bow-tie analysis reveal about operational incidents?
It can identify common features and structural risk profiles within an organization.
How does the second line of defense contribute to operational risk management?
Check out that bow tie
By monitoring and tracking action items, and facilitating bow-tie analysis across departments.
Why is a common operational risk event template important?
It ensures a consistent approach to risk management across the bank’s divisions.
What is a common issue in operational risk management related to communication?
Defective internal communication flows can lead to disparate incidents and ineffective risk management.
How should action plans align with risk appetite?
Action plans should be consistent with risk appetite, ensuring that unacceptable events do not reoccur.
