and settlements in Copenhagen, September 5-9, 2005.
Philadelphia, USA (August 26, 2005)âThe Risk Management Association (RMA)
today announced that its KRI Services would be showcased at SIBOS, the
premier annual conference on payments and settlements, hosted by SWIFT.
SWIFT is the industry co-operative supplying secure, standardized messaging
services and interface software to 7,800 financial institutions in more
than 200 countries. This year, SIBOS will be held in Copenhagen, Denmark,
September 5-9, 2005.
KRI Services is the RMA-sponsored global initiative to standardize, benchmark, and support best- practice use of key risk indicators for operational risk within financial services. These indicators are hosted in the KRI Library, a Web-based repository, which also supports activities, news, best practices, and case studies for KRI Services subscribers and their working groups. Over 70 banks and other financial intermediaries now subscribe.
As well as indicators, the library today includes many other operational
risk resources. Among the most important is a set of industry risk maps.
These maps are built on a standard framework, which defines risk points in
terms of type of risk, product, and function. The maps show which points
are high risk, which are medium, and which are lowâbased on an aggregation
of subscriber assessments. The library links the maps and the indicators so
that subscribers can see which indicators apply to which risk points.
These maps show that many financial institutions view payments and settlements as among the highest operational risk areas.
Charles Taylor, director of operational risk at RMA, who is a former head
of strategy at Depository Trust & Clearing Corporation (DTCC), says:
"Indicators are already used in this business, but few if any institutions
believe they are using them as well as they could or should. With more than
200 payments and settlement-related indicators in the library as it stands
today, we have constructed a resource that can begin helping institutions
raise their game."
Taylor believes KRIs will become an increasingly critical tool for managing
operational risks in payments and settlement. "We have made a good start,
but our recently launched KRI Services Working Group on Payments and Settlement has important work to doâto fill in the library, launch benchmarking, and generally support improvements in KRI use and effectiveness across the industry," he said.
The next major objective for KRI Services is to launch benchmarking. Mike
Finlay, managing director at RiskBusiness International, the advisory services partner to RMA that delivers KRI Services, expects standardized payment and settlement benchmarks to be a major step forward for the industry. "In many situations, operational losses have become accepted as a cost of doing business," he said. "But what if we had benchmarks for the total number of settlement defaults, the average value of interest claims, the number of counterparty complaints? Then a firm can assess itself against industry performance and, if it is more than an acceptable number of standard deviations from the mean, ask why. This must lead to both improved processes and controls and to higher profitabilityâthe reason we are bringing the KRI Library to SIBOS."
RMA and RiskBusiness will be providing introductions to the KRI Library for interested financial services firms for the duration of SIBOS at Stand A08.