Operational Risk and Compliance
| Date: | November 2007 |
| Author: | Clare Vincent-Silk |
| Price: | £3,000 to non-members of the Investit Intelligence member service |
This paper focuses on the roles and organisational structure of operational risk and compliance within investment management firms. Additionally it focuses on how compliance and risk can act as business enablers. It looks at the IT system providers that can support these functions and also how firms, regulators and industry bodies are adopting a more principle-based regulatory environment.
Table of contents
| Management Summary | 1 | |||
| 1.0 | Introduction | 3 | ||
| 1.1 | Scope | 4 | ||
| 1.2 | Methodology | 5 | ||
| 2.0 | The control functions | 7 | ||
| 2.1 | Definitions | 8 | ||
| 2.2 | Organisational options | 9 | ||
| 2.3 | Convergence of control functions | 12 | ||
| 2.4 | Executive ownership | 13 | ||
| 2.5 | Skill sets required | 14 | ||
| 3.0 | Compliance | 17 | ||
| 3.1 | The compliance function | 18 | ||
| 3.2 | The scale and cost of compliance | 22 | ||
| 3.3 | Outsourcing | 25 | ||
| 4.0 | Operational Risk Management | 29 | ||
| 4.1 | What is operational risk management | 30 | ||
| 4.2 | Evolution of operational risk management | 32 | ||
| 4.3 | The role of the operational risk manager | 35 | ||
| 4.4 | The challenges of the operational risk function | 42 | ||
| 4.5 | Supporting an operational risk function | 44 | ||
| 4.6 | How to create an effective operational risk framework | 45 | ||
| 5.0 | Control functions as an enabler | 47 | ||
| 5.1 | The value-add of compliance | 48 | ||
| 5.2 | The value-add of operational risk management | 49 | ||
| 5.3 | The role of control functions in the sales process | 50 | ||
| 6.0 | Business software applications | 53 | ||
| 6.1 | Compliance applications | 54 | ||
| 6.2 | Enterprise risk management systems | 57 | ||
| 6.3 | Commercial software packages | 60 | ||
| 7.0 | Principal-based regulation | 63 | ||
| 7.1 | What is principal-based regulation? | 64 | ||
| 7.2 | Working with multiple regulators | 65 | ||
| 7.3 | How is it working in practice? | 66 | ||
| 7.4 | How do the trade associations fit in? | 68 | ||
| 7.5 | Issues with "providing industry guidance" | 69 | ||
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