Operational Risk Management (ORM) in a growing microfinance industry

1. Michael Kortenbusch BFC Managing Director November 15 Luxembourg Operational Risk Management (ORM)in a growing microfinance industry

2. Who is involved? ORM Process Success Factors

3. Who is involved? Board General Management Risk Management Line Function 1 Line Function 2 Line Function 3 Line Function 4 Line Function 5

4. Operational risk management process Top Down Assesment (TDA) Planning Implementation Decision Analysis

5. Top Down Assessment (TDA)

6. Operational risk management process Planning Implementation Loss registration Decision Analysis Risk Self Assessments (RSAs)

7. Register Operational Losses Credit note or complaint Approval Information Assessment Registration 1 2 3 4 5 ORM Committee Definition of action plans Follow up 7 8 6 Line staff Risk Management Management Board

8. Risk Self Assessment 15.11.2012

9. Operational risk management process Planning Implementation Review Decision Analysis Approval of risk mitigation actions

10. Step 1: Number of Operational Losses per year end Step 2: Process allocation Step 3: Complaints per Process Review

11. Operational risk management process Communication Planning Implementation Decision Analysis

12. Communication Authorities Staff Regulating Bank ORM Corporation/ Mother Company Department Heads Local Management Board

13. Success factors for Operational Risk Management Must have Will have HARD FACTS Procedures RM Committee SOFT FACTS Trained staff • HARD FACTS • Defined processes • ORM Tracking System • SOFT FACTS • Committed management • Staff awareness

16. "To win without risk is to triumph without glory."— Pierre Corneille

17. BFC offers Max-Högger-Strasse 6 Phone: +41 44 784 22 22 info@bfconsulting.com CH-8048 Zurich, Switzerland Fax: +41 44 784 23 23 www.bfconsulting.com