Understanding the Concept of Risk Control & Self Assessment

Understanding the Concept of Risk Control & Self Assessment

Introduction

RCSA (Risk & Control Self Assessment) explains an explicit set of standards that help companies or commercial institutions in identifying and understanding its risk exposure (Ronald et al, 1998). RCSA is an effective decision making tool that assists in the identification of functional and operational risk. Risk Control and Self Assessment tool efficiently help firms in designing the finest courses of actions for an upcoming event. Risk and Control self assessment is performed at development stage and during operations. This assignment is conducted to show the designing and implementation of Risk Control and Self Assessment in M Bank to control its operational risk. Since, the objective of this assignment is to design and implement a proposed model of risk management therefore the outcomes should not be considered as final and complete (Khatta, 2008).

Discussion

In order to minimize the risk, M Bank is implementing the Risk Control and Self Assessment (reporting control and self assessment) framework.

Objectives of Risk Control & Assessment Process

RCSA is designed and implemented to address a number of objectives, these objectives and aims includes;

Establishing a functional and long term contact with risk owners

Qualitative assessment of the risk

Get in-depth information about complex risk events

Event analysis, Scenarios analysis and risk rating assignment

Prioritizing (setting priorities)

Developing or designing strategies of controlling and managing risk

Management awareness

Action Approval

Risk Control and Self Assessment Process for M Bank

The Risk control and assessment process of M Bank is dependent upon the 6 stages. Implementation of such seven stages will protect the bank from the threat of operational risk (Hong Kong Institute of Bankers, 2013). Details of task carried out in each stage are listed below.

First Stage (Risk Control and Self Assessment Preparation)

It is essential that Risk Control and Self Assessment framework is prepared according to the strategies, business requirement and existing risk environment of the M Bank. Mutual consensus of stakeholders is necessary for the preparation and implementation of the Risk Control and Self Assessment framework. In addition, collection and analysis of the data related to the banks environment also plays an important role in the preparation phase of the RCSA designing. Understanding of the given aspect is necessary for the preparation of Risk Control and Self Assessment.

Objectives and strategies of M Bank, Including its mission and key priorities

Bank's risk appetite

Changes that take place in the bank due to previous assessment

Examination of Internal and external risk audit reports Second Stage (M Bank's risk identification & Assessment)

At this stage we are going to identify the risk that are affecting Bank's performance, and is increasing the number of complaints registered by the company. The problem which M Bank is facing is related to the errors present in the accounting and book keeping of the customers account. Number of registered complains was increasing day by day in these two branches of M Bank. Dissatisfied customers were planning to take legal actions against the mishandling of ...