"Operational risk remains at an early stage of development, and although some firms have made substantial progress, many still need to think carefully about how to prepare for the FSA's new approach. The industry has told us that an analysis of current practice would help firms to develop their plans. Today's publication aims to meet this need as well as making a contribution to the wider debate about operational risk management practices."
The review also confirmed that the FSA's new policy on operational risk remains appropriate and no significant changes will be made to the policy set out in Consultation Paper 142, published last year. The main findings of the review demonstrated that firms more advanced in their approach to operational risk management had:
- established senior management commitment to the management of operational risk;
- integrated operational risk decisions into the business framework;
- used a building block approach to develop and then enhance their approach, learning as they went; and
- developed a clear internal focus for operational risk, often having a separate operational risk function to drive forward the programme.
The review was undertaken both to provide feedback to industry on the preparations being made and to inform the FSA's own approach and enhance its knowledge.
