Chapter 4 - People, Processes and Risk Flashcards
What were the typical attribute of a banking job before the 1980s?
Career with one bank.
Clear pathway or progression from clerk to branch manager.
All main branch processes handled in branch.
Greater overall branch and staff numbers per customer.
Low incidence of technology.
What were the typical attribute of a banking job after the 1980s?
Higher staff turnover.
Staff trained as specialists in a narrow range of skills.
Centralisation and outsourcing of functions.
Fewer branches and staff per customer.
Technological revolution.
What are the essentials things that a Third-Party policy must consist of?
Awareness by Business Units, Project Sponsors and Project Managers of their obligations and requirements.
Consistent and fair approach to be adopted.
Roles and responsibilities defined.
Risk approval in a clearly stated process.
Undertake risk assessment on the suitability of third parties.
Accountability and responsibilities clearly defined and documented.
Legal and regulatory requirements adhered to (locally and cross-border).
Define the types of risk a bank may face.
Financial risks - credit, market and liquidity.
Regulatory - law and codes of practise.
Operational/other - process, people, systems, external etc.
What is the main job of the Risk Management function?
Mission identification
Risk and uncertainty assessment
Risk control
Risk financing
Program administration - ensuring day to day management operations run smoothly.
What are the continuous steps of the Risk Management Cycle?
Policy Statement > Identification > Measurement > Analysis > Decisions > Implementation > Monitor > [Start process again]
What are the ways in which you can identify a risk?
Workshops
Questionnaires
Loss data capture and analysis
Near miss analysis and experience
How do you go about measuring the consequence/impact of a risk?
Rate:
Financial Impact
Operational Impact
Stakeholder Impact
As high, medium or low.
How do you measure the probability of a risk occurring?
High: Probably
Medium: Possible
Low: Unlikely
What are the different methods of risk handling?
Acceptance - Risk has low likelihood of occurring and minimal consequence. Therefore, it is accepted.
Avoidance - Risk is such a threat to the business that is avoided at all costs.
Retention - Accepts the risk intentionally or unintentionally but has mitigation approaches in place to reduce the retained risk or the impact of the risk event should it occur.
Transferring - Risk is transferred to another party who accept the risk. E.g. a lease-holder may require that the asset is returned to them at the end of the leasing period in the same condition as at the start.
Sharing - Risk is reduced to an acceptable level by the organisation sharing the risk with another party - for example, through a joint venture.
Reduction - Reduce the risk of event occurring or reducing the impact if it does occur.
What are the data management systems that can be used in a bank?
Transaction Processing - Collects and stores data from routine transactions.
Management Information - Converts data from the transaction processing.
Decision Support - Supports managerial decision making by providing models to process and analyse data.
Executive Information - Provides information to senior management to inform the strategic management of the business.
Data Mining - Use statistical analysis to uncover hidden treats and relationships in data.
What are the desirable attributes of data storage systems?
Secure
Up to date.
Reliable and precise.
Fit for purpose.
Accessible
Easy to move.
What are the problems with data management systems?
Redundancy - Same data may be stored in a number of locations. Need to ensure it’s up to date in all locations.
Lack of control - Data being managed in different ways across the bank. Inconsistency.
Poor interfacing - Useless to users.
Delays - In getting hold of data.
Reality - Data must be relevant to the climate in which the firm operates.
Lack of integration - If the data is spread throughout the organisation, the task of integrating it throughout the firm may be costly and complex.
What is the approach to re-engineering a business process?
- Developing the business vision and process objectives.
- Identify the business processes to be re-designed.
- Understand and measure the existing processes.
- Identify IT levers.
- Design and build a prototype of the new process.
Why could business process re-engineering be criticised?
Staff wary that redundancy may feature.
Focus shifts from customer to internal procedures.
Involves a “clean slate” redesign rather than just tinkering.
Requires considerable change management skills and therefore…
Incremental continual change process may be more appropriate.
In terms of TQM, businesses should..?
Know their business direction.
Know their customers.
Know what their customers think of the services/products.
Provide good value.
Be committed to finding problem areas.
Be committed to pursuing TQM, especially at top management level.
In line with TQM, define the toolkits of creative and problem-solving techniques that manager should equip themselves with?
SWOT and PESTLE analysis
Brainstorming and nominal group technique
Quality circles
Six sigma
6 Thinking Hats
What does SWOT analysis look at?
Strengths
Weaknesses
Opportunties
Threats
What does PESTLE analysis look at?
Political
Economic
Social
Technological
Legal
Environmental
How should brainstorming be conducted?
No criticism.
Free flowing of ideas.
Go for quantity initially.
Record.
Cross-fertilise - Using other people’s ideas as springboards for your own.
Incubate - Narrow down and discuss best option.
Reverse brainstorm - Turning the question on it’s head.
What are the underlying principles of Nominal Group Technique?
Nominal groups produce better results (than classic brainstorming)
Round-robin element provides encouragement and equal opportunities.
Checks for accurate communication are inbuilt (recipient checks with sender)
What is the standard procedure for NGT?
- Facilitator states the problem and participants and facilitator have a specific amount of time to jot down any initial ideas privately.
- Round-robin recording - Each person in turn to read out one idea, which the facilitator writes up on a flip chart for all to view and numbered sequentially.
- Serial discussion to clarify ideas and check communications is encouraged by the facilitator.
- A preliminary anonymous vote on item importance is usually carried out.
- Further discussion and voting takes place if the voting is not consistent.
What is a quality circle?
A group who meet regularly to discuss quality work related issues to problem solve.
What does a quality circle require?
Senior management commitment.
Teams of 5 to 20 people who:
Participate freely together to challenge assumptions and existing methods, examine data and explore possibilities.
Able to call in expertise and ask for training.
A budget to enable tests and possible pilots.
A skilled team leader to facilitate.
