We are pleased to announce that the IOR England and Wales Chapter has produced a pre-recorded webinar ‘Key Impact Deep Dive‘.
Supervision of the global banking system has been subject to a number of reforms and enhancements since the financial crisis. However, the Basel Committee on Banking Supervision (BCBS) recognises in their March 2021 publication on principles for operational resilience that more work is required to “strengthen banks’ ability to absorb operational risk-related events, such as pandemics, cyber incidents, technology failures and natural disasters, which could cause significant operational failures or wide-scale disruptions in financial markets”.
Consideration of severe but plausible scenarios is a crucial component of managing disruptive events and incidents that pose a threat to an institution’s ability to continue operating. More generally, scenario analysis is a well-established risk management activity which the BCBS considers to be an integral component for the sound management of operational risk.
In this recorded session David Goodyear (Chair of IoR England and Wales) chairs a panel discussion between Philip Umande (Head of Operational Risk Capital & Analytics, Lloyds Banking Group), Bill Stirling PIOR (Technology Risk, Operational Resilience and Non-Financial Risk Lead, London Stock Exchange) and Luke Carrivick (Director of Research and Information, ORX).
David, Philip, Bill and Luke discuss scenario analysis and how practices are evolving across the financial sector. Philip also talks through a new approach for assessing extreme impact based on undertaking a Key Impact Deep Dive (KIDD). Philip explains how KIDD can be applied in the context of operational risk financial impacts, but also explains that the KIDD approach can be applied more generally, for instance to help businesses manage impacts that threaten operational resilience. The KIDD involves focusing on the impact of an event, instead of what caused the event to occur, and can be used as an additional risk management tool and potentially as an alternative to quantifying individual scenarios when a firm is looking to assess regulatory or economic capital requirements.