Investment operational consultant, Basis Point Group has incorporated Basel II risk management requirements into its operational metrics methodology, OPERA(tm).
“Basis Point Group’s OPERA(tm) BASEL II risk assessment process provides a more definitive method for assessing operational value at risk,” said Francis Sullivan, London-based Partner of the Basis Point Group. “OPERA(tm) BASEL II is a new approach that complements the current actuarial methods for operational risk measurement in the Basel II guidelines.”
The metholody was developed in response to banks’ limited ability to monitor and manage operational risk using current insurance and actuarial-based loss history methods traditionally used to track losses.
Methodologies that assess the possibility of ‘losses resulting from inadequate or failed internal processes, people and systems or from
external events,’ have to date lacked a direct link between actual processing risk and the probability of loss.
OPERA(tm) BASEL II provides that link, utilizing data generated in the normal course of business to better identify and manage operational process risk. A four-level calculation process provides key events indices that identify processing ‘hotspots’ while tracking the organization’s effectiveness, transparency and efficiency.
“OPERA allows an organization to determine what is actually happening and presents performance and risk in quantitative terms to allow corrective action using the same data to determine operational capital requirements,” said Fred Sommers, Boston-based partner of the firm.