Managing Operational Risk in Financial Markets

As organizations move away from functional structures, where

individual specialist skills are grouped together into single depart-

ments, to project organizations, where the focus is on integrated

project teams that include all the functional expertise necessary

for the project, there is a requirement to adopt new management

models. The project teams are responsible for introducing change

in the organization, both organizational and technical, and are

brought together for the duration of the project. A project can be

the development and implementation of a small local system that

only affects an individual or a small group or a co-ordinated set

of enterprise wide activities that fundamentally change the orga-

nizational culture and mindset. Project management is an impor-

tant function within the organization and is a key activity in

managing operational risk within a financial institution.

The introduction of an enterprise-wide risk management system

can affect the whole structure of the organization and is likely to

impact all the major functional areas of the financial institution

including trading, operations, information technology, communi-

cations, compliance, regulatory reporting and risk management.

In order to effectively manage a project of this type and scope it is

imperative that project management procedures are in place that

cover the complete project life cycle including project planning,

progress measurement, reporting, managing the financial aspects

of the project and implementation and operation of the system.

These procedures are designed to ensure that the change is deliv-

ered on time, within budget and that it meets the business needs.

Project management for

an enterprise-wide risk

management system

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