Note: This question is based on a process selected from your own (or a familiar) workplace. The type of organisation you work in or the process chosen is irrelevant but must be sufficient to answer the questions asked. Donot choose a process associated with the settlement of a new loan as described in Question2 above.

(a)Choose a process that is undertaken in your workplace. Briefly describe the process you have chosen and provide a flowchart of the process.

As a guide to a flowchart look at the example provided in Appendix1. Examples of a workplace process include a trading process, a data collection process or a publishing process.

Note:

The process chosen can be from any type of organisation (i.e. it does not have to be a banking process).

The flowchart in Appendix 1 is a guide only and other flowcharting methodologies and types are acceptable. This question is not a test of your ability to flowchart but is designed to assess logic and to ensure that all steps in the process have been sufficiently identified. The flowchart should be detailed enough to explain the process. (4 marks)

(b)Identify at least six (6) key operational risks associated with your chosen process and describe the tools you would use to identify these risks. (6 marks)

(c)Develop a risk heat map for the operational risks you have identified and provide an explanation of the ranking of each risk on the map. (4 marks)

(d)How would each risk identified in part (b) be mitigated? What controls should be implemented? (6marks)

(e)Scenario analysis can be used to identify operational risks that may not yet have occurred butmay have a significant impact.

Based on your chosen process write, a what-if scenario to identify unexpected, high impact operational risks in the process. Explain why this is an appropriate what-if scenario and discuss the challenges in undertaking successful scenario analysis in practice. (4 marks)

(f)(i)Key risk indicators (KRIs) are a primary tool used throughout the operational risk management process.

Discuss the role of KRIs in operational risk management and the challenges in using them. (4marks)

Your discussion should address the following:

how KRIs are used in operational risk management

an explanation of the types of KRIs

the usefulness of KRIs in operational risk management

the challenges and pitfalls in using KRIs.

(ii)Provide three (3) examples of KRIs for the process you described in part (a) of this question. Indicate what type of KRI they are and explain what characteristics make these KRIs rather than just common indicators. (3 marks)