Operational Risk Appetite Feedback

1. Provide an assessment of experience to date in implementing a Risk Appetite Framework (RAF) in your oganization.

Successful implementation: RAF is embedded in the business and brings added value to the setting of strategic objectives.

Good progress: passed the design phase and working on the roll out.

Mostly a reporting tool

Top-down only.

Little progress

Not embarked in the process

2. Indicate your organization's key priorities and objectives in the next steps on the implementation of the Risk Appetite Framework (please select top three risk priorities).

Integrate Risk Appetite into ongoing management of the business

Establishment of robust measurement and monitoring framework

Integratation of Risk Appetite into strategic planning

Development of stress testing (including better integration with Risk Appetite)

Improve IT/data quality to support Risk Appetite

Further develop and embed Risk Culture

Comprehensive overview covering business, strategic & operational risk

3. Provide an indication of the key outstanding challenges that your organization has encountered or is encountering while implementing RAF (please select top three challenges).

Effectively cascading the risk appetite statement through the operational levels of the organization and embedding it into operational decision making.

How to best express Risk Appetite for different risk types, some of which can be quantified in generally accepted ways, and some of which cannot be easily quantified.

Using RAF as a dynamic tool for managing risk rather than another way of setting limits or strenghtening compliance.

Using RAF as a driver of strategy and business decision.

Achieving sufficient clarity around the concept of Risk Appetite and some of the terminology used (e.g. difference between Risk Appetite and risk limits).

How to effectively relate Risk Appetite to Risk Culture.

How to make best use of stress-testing in the Risk Appetite process.

How to most effectively aggregate risks from different business units and/or different risk types, for Risk Appetite purposes.

4. Provide an indication of the types of Risk Appetite statements implemented.

A combination of qualitative and detailed quantitative outcomes.

Only high level quantitative outcomes

A combination of qualititative and and high level quantitative outcomes

Only detalied quantitative indicators for the business

Only a qualitative indication of preferred outcomes

5. What process was used to agree on the Risk Appetite statements?

Senior management take the initiative and the Board agrees this by means of a challenge process.

Senior management take the initiative and the Board largely endorses this without substantive challenge

The Board/Risk Committee takes the initiative

An offsite/workshop or series of meetings are conducted with all participants and the Risk Appetite is agreed as a results of multiple, iterative discussions.

6. What was the method used to link statements with the behavior of staff?

Translated into limits.

Strong risk culture.

Policies/Procedures/Guidance

Risk-adjusted performance measures

Code of conduct/rules

New product/deal approval

7. What are the most relevant drivers of RIsk Appetite (please the top three drivers)?

Capital capacity.

Budget targets.

Liquidity or other constraints.

Culture.

Shareholder input and perspectives.

Stress test results

External market dynamics/considerations

8. Indicate your implementation challenges (please select top three challenges).

Establishing effective risk culture at all levels in the bank.

Establishing consistent approach to risk across all business/products.

Improving information systems (either to calculate risk or improve risk reporting).

Translating high level objectives into meaningful business level guidelines.

Integration of Risk Appetite into strategic/business plans.

Achieving clarity of concepts.

Balancing risk/reward.

9. Indicate your biggest achievements to date (please select top three achievements).

Agreeing on a risk appetite statement approved by the Board.

Clear and agreed framework to integrate risk, strategy and capital allocation.

Obtaining Board and Senior Management "buy-in" to the process.

Integration of Risk Appetite into strategic plans.

Better definitions (and calculation) of different types of risk.

Embedding a culture of Risk Appetite within the wider business.

Establish appropriate governance, monitoring and review for the Risk Appetite Framework.

Cascading of Risk Appetite jto business unit level.

10. Indicate the biggest benefits from having a Risk Appetite Framework in place (please select top three benefits).

Strategic risk converstation at Board and Senior level.

Foster culture or Risk Appetite throughout organization.

Integration of Risk Appetite into strategic/business plans.

More effective risk/reward decision making across organization.

Consistent language of risk across all levels.

Risk management have greater role in working with business to set strategic and plans.

Improved enterprise risk management throughout the organization.

Being able to report and explain the firm's risk profile against agreed Risk Appetite metrics.

Establish consensus on how much risk we can afford.

OpRisknet Survey 2013 - The Risk Appetite Framework