| Summary: | 碩士 === 國立臺灣大學 === 財務金融組 === 99 === A Study of the Enterprise Risk Management from the Financial Institution’s Operational Risk Management Practices
The recent rash of business scandals and fraudulent operational events have seriously worn down investors’ confidence and wreaked dreadful havoc to the social and economic system. In order to reform these abuses, the global leading countries and international organizations have legislated laws and risk management regulations to require enterprises to enhance corporate governance and risk management mechanism, which made the enterprise risk management (ERM) practices more important than ever.
Though ERM is conducive to the business operation, cases of successful implementation are still very few. Because of the non-calculable benefit, high initial investment, misunderstanding to the general ERM concept, business-oriented mentality and top management’s indifferent attitude, this well designed mechanism has not yet fully shown its true effect. Furthermore, the abstract and tedious contents of related ERM guidelines are not easily translated into practical steps, making ERM less efficient than it has to be.
Financial institutions, on the other hand, have been actively engaged into the establishment of risk management processes under Supervisor’s close watch. In addition to the market and credit risk processes, the operational risk management (ORM) skill is also gaining ground gradually. In the this regard, this paper tries to discuss the essence and contents of ERM by introducing financial institutions’ practical ORM processes in an effort to assist enterprises to implement the ERM mechanism with ease.
This paper consists of two parts. First, it describes and makes comparisons of the characteristics of four major international risk management guidelines namely, Basel II, COSO ERM, AS/NZS 4360 and Canadian IRMF, so as to elaborate the items and contents that ERM covers. Secondly, it illustrates financial institutions’ ORM structure and mechanism by using Risk Control Self Assessment (RCSA) and Loss data collection as case studies to explain in details the relevant steps, challenges and real benefits as references for the enterprises while planning to implement the ERM.
The major findings of this paper are as followed:
1. The definitions and contents of the above mentioned risk management guidelines might differ, however, the practical processes are much the same, which are basically risk identification, risk assessment, risk response and monitor/report. All four Guidelines take risk identification as the first step. The essence and contents of ORM of the financial institutions and ERM are also much the same.
2. The ORM practices undertaken by financial institutions are proved to be beneficial, which are able to systematically improve operational processes, assist top management to get a grip of the risk profile and enhance risk culture.
3. The enterprises can follow financial institutions’ ORM for the ERM processes to analyze various risks in their daily works, project implementation and operational decisions to adopt control measures and incorporate risk management into the on-going operational processes.
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