In July 2017, the WAMU Banking Commission published circulars relating to:
- Governance of WAMU credit institutions and financial companies;
- Aux conditions d’exercice des fonctions d’administrateurs et de dirigeants au sein des établissements de crédit et des compagnies financières de l’UMOA ;
- Internal control of credit institutions and financial companies in the WAMU ;
- A la gestion des risques dans les établissements de crédit et les compagnies financières de l’UMOA ;
- A la gestion de la conformité aux normes en vigueur par les établissements de crédit et les compagnies financières de l’UMOA.
Assessing operational losses: what's in the pipeline?
En ce qui concerne la gestion des risques opérationnels, la BCEAO exige notamment, dans l’article 29 de la Circulaire N°04-2017/CB une mesure des pertes opérationnels subies par la banque.
For each operational loss identified, they should be identified and classified in one of the following categories (Basel category):
- Loss due to internal fraud ;
- Loss due to external fraud (customer fraud, for example) ;
- Losses related to employment practices and workplace safety ;
- Losses related to customer, product and business practices ;
- Loss due to damage to physical assets ;
- Perte liée aux interruptions d’activités et défaillances des systèmes ;
- Losses related to operations, delivery and process management.
The dates on which the loss was discovered and the dates on which it was investigated must be indicated, so that the time between the occurrence of the loss and its discovery can be measured and the effectiveness of the loss detection system put in place by the establishment can be gauged.
The establishment must then quantify the loss (financial prejudice) as well as the amount recovered following the establishment's investigation or complaint. The CBU does not specify any other obligations in terms of information.
Links with risk mapping
However, we believe that once the operational loss has been identified, it would be wise to link this loss to the establishment's operational risk mapping, in order to quantify the risks thus identified and facilitate future risk assessments. This loss will then be added to the relevant operational risk sheet, providing a 360° view of the risk. This will provide a dynamic risk map and facilitate future risk assessments.
In addition, linking operational risk loss and operational risk to a risk management system enables the bank to measure the effectiveness of its risk management system, and thus measure the benefits of implementing a comprehensive risk management system.
Documenting feedback
Once the operational loss has been investigated, it would also be a good idea to add to the loss report form any feedback (lessons learned) on the nature and causes of the loss observed, and what can be done to prevent it happening again in the future.
A software solution to facilitate data collection and analysis
To facilitate the rapid reporting and consolidation of operational risk data, a software tool has been developed to monitor operational losses at company level.
Cet outil devra prendre en compte les exigences réglementaire (article 30 de la circulaire N°04-2017/CB/C) qui prévoient notamment que la gestion du risque opérationnel doit couvrir l’ensemble des sept catégories d’événements de pertes opérationnelles susmentionnés.
We can help you set up a software solution to ensure consistent data collection and reporting. This solution takes into account the requirements of the Circular, while integrating the size, nature, complexity and risk profile of your structure, to guarantee adequate and optimal risk management.
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