Operational Risk Management in Financial Services: A Practical Guide to Establishing Effective Solutions

by Elena Pykhova

Technology failures, data loss, issues with providers of outsourced services, misconduct and mis-selling are just some of the top risks that keep financial firms up at night. In this context effective operational risk management is, simply, a commercial necessity.

The management of operational risk, defined by the Basel Accord as arising from failures of processes, people, systems or external events, has developed considerably since its early years. Continued regulatory focus and catastrophic industry events have led to operational risk becoming a crucial topic on senior management's agenda. This book is a practical guide for practitioners which focuses on how to establish effective solutions and avoid common pitfalls.

Filled with frameworks, examples and diagrams, this book offers clear advice on key practices including conducting risk assessments, assessing change initiatives, designing key risk indicators, establishing scenario analysis, drafting appetite statements and carrying out risk reporting. Operational Risk Management in Financial Services also features results from polls taken by risk practitioners which provide a snapshot of current practices and allow the reader to benchmark themselves against other firms. This is the essential guide for professionals looking to derive value out of operational risk management, rather than applying a compliance 'tick box' approach.

384 pages, Paperback

Published July 3, 2021

About the author

Elena Pykhova is an operational risk executive specializing in strategy, design and implementation of firm-wide operational risk frameworks, based in London, UK. She is an experienced operational risk trainer, running public and in-house training courses in the UK and internationally for world-leading venues such as the London Stock Exchange Academy. She is a thought leader, influencer and founder of a think tank, Best Practice Operational Risk Forum. She is the Chair of the Operational Risk Expert Panel for the Association of Foreign Banks and the former Director for Education at the Institute of Operational Risk. Passionate about the discipline, she founded her training and consulting practice after 20 years of experience in senior roles at Fortune 500 companies.

Reviews

[Yuliya]

What prompted me to read this book is a high concentration of practical solutions, based on the author’s first-hand experience. Professionals who devoted many years to achieving excellence in operational risk management are as rare as they are impressive.

Elena explains how to progressively introduce operational risk practices with the use of uncomplicated three-step approach, and helps to identify the appropriate ways to minimise operational risks. Besides, Elena points up the importance of the risk culture in financial organisations, and suggests some practical steps towards its assessment and development.

This book turned out to be extremely valuable for implementing operational risk practices in my organisation. Very few books are entirely focused on operational risk management in financial services, although the most demanding requirements for operational risk management are imposed on financial institutions. So, I would definitely recommend it to operational risk professionals working in financial services.

[Christine]

There are not many books on operational risk in finance, so it is nice that this one came around. Complete with diagrams, graphs, and samples, this book does a great job explaining risk framework in a simple, and understandable way. This really could be considered the guidebook for those new to operational risk. Thank you Netgalley for a ARC.

[Foroiane]

Operational risk management in financial services is essential for maintaining stability and customer trust. It involves identifying potential risks, such as system failures, fraud, or compliance issues, and implementing strategies to mitigate them. A key part of this is having strong internal controls and regular audits to ensure everything runs smoothly. For example, reading Amscot Financial reviews can provide insights into how a company manages these risks from a customer perspective. It’s also essential to train employees thoroughly on risk management practices and stay updated on industry regulations.

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