
Management control of operational risk 21
wrong bets (which is part of management risk), eventually resulting in operational
deficiencies characterizing control processes or systems. By contrast, well-managed
companies attempt to mitigate operational risk by:
䊏 Maintaining a comprehensive internal control, and
䊏 Employing experienced, well-trained dedicated personnel.
This is the right direction in operational risk control, but while necessary, by itself
it is not sufficient. For each functional area deemed to be potentially of medium to
high risk, senior management should perform a rigorous risk self-assessment. Its goals
must be to evaluate the appropriateness ...