Operational Risk Operational Risk Management Management

& & the the

Trinidad & Tobago Trinidad & Tobago ExperienceExperience

presented by presented by Mr. Anthony Taitt, Mr. Anthony Taitt,

Trinidad & Tobago Central Trinidad & Tobago Central DepositoryDepository

AGENDAAGENDA

Definition of Operational Definition of Operational RiskRisk

Measuring Operation RiskMeasuring Operation Risk

Financial Institutions Financial Institutions Activities & Operational Activities & Operational RiskRisk

Operational Risk Management Operational Risk Management FrameworkFramework

AGENDAAGENDACorporate Governance in Trinidad & Corporate Governance in Trinidad & TobagoTobago–Structure for the Domestic Structure for the Domestic Financial SystemsFinancial Systems

–Enterprise Risk Management Enterprise Risk Management Framework & PolicyFramework & Policy

Operational Risk Management – Operational Risk Management – Stock ExchangeStock Exchange–The ExperienceThe Experience–The FrameworkThe Framework–The OutcomeThe Outcome

Trinidad & Tobago Trinidad & Tobago Central DepositoryCentral Depository

Operational RiskOperational Risk

The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

This definition does not include strategic or reputation risks.

Measuring Operational Measuring Operational RiskRisk

Using the Matrix Approach to measure risks the following events held the highest Using the Matrix Approach to measure risks the following events held the highest impact potential:impact potential:

Internal & External FraudInternal & External FraudWorkplace Health & SafetyWorkplace Health & SafetyBusiness PracticesBusiness PracticesPhysical Asset DamagePhysical Asset DamageBusiness Disruption & System FailuresBusiness Disruption & System FailuresExecution,Delivery & Processes ManagementExecution,Delivery & Processes Management

Financial Institutions’ Financial Institutions’ Activities & Operational Activities & Operational

RiskRiskPeople - Management Failure, People - Management Failure,

Organizational Structure, HR Organizational Structure, HR FailuresFailures

Processes – Process Breakdown, Processes – Process Breakdown, Inadequate Process MappingInadequate Process Mapping

Systems – System Disruption, Systems – System Disruption, System Failures in both Internal & System Failures in both Internal & External Outsourced OperationsExternal Outsourced Operations

Events – Natural Disasters, Events – Natural Disasters, Terrorism & VandalismTerrorism & Vandalism

Operational Risk Operational Risk Management FrameworkManagement Framework

Independent Firm-Wide Independent Firm-Wide Operational Risk FunctionOperational Risk Function

Line Management OversightLine Management Oversight

Independent Testing & Independent Testing & Verification FunctionsVerification Functions

Corporate Corporate GovernanceGovernance

Trinidad & Tobago Experience Trinidad & Tobago Experience with Operational Riskwith Operational Risk

Structure for the Domestic Structure for the Domestic Financial SystemsFinancial Systems

Enterprise Risk Management:Enterprise Risk Management: Framework & Policy Framework & Policy

Enterprise Risk Enterprise Risk Management Framework & Management Framework &

PolicyPolicy

The ExperienceThe ExperienceTTCD began Registry services and the TTCD began Registry services and the

clients began demanding Business clients began demanding Business Continuity Plans & Disaster Recovery Continuity Plans & Disaster Recovery Plans be developed & implemented.Plans be developed & implemented.The TTSE agreed to link with the The TTSE agreed to link with the

Barbados & Jamaica Exchanges to Barbados & Jamaica Exchanges to establish a virtual Regional Exchangeestablish a virtual Regional ExchangeSteering Committee meetings revealed Steering Committee meetings revealed

limitations to just oversee projects & limitations to just oversee projects & reconstituted itself as an Enterprise reconstituted itself as an Enterprise Risk Management Steering Committee Risk Management Steering Committee (ERMSC )(ERMSC )ERMSC submitted its new mission & ERMSC submitted its new mission &

objectives to the board for approval & objectives to the board for approval & the 5 Managers involved were to each the 5 Managers involved were to each oversee a specific risk category.oversee a specific risk category.

Operational Risk ManagementOperational Risk ManagementTrinidad & Tobago Stock Trinidad & Tobago Stock

ExchangeExchange

The FrameworkThe FrameworkExchange Board established a firm-Exchange Board established a firm-

wide Operational Risk Policywide Operational Risk PolicyERMSC now establishes & approves ERMSC now establishes & approves

all risk policiesall risk policiesAll other risk committees review All other risk committees review

all procedures then submit to ERMSC all procedures then submit to ERMSC for approvalfor approvalInternal Audit performs Internal Audit performs

independent reviews of all risk independent reviews of all risk policies and procedures.policies and procedures.

Operational Risk ManagementOperational Risk ManagementTrinidad & Tobago Stock Trinidad & Tobago Stock

ExchangeExchange

Operational Risk ManagementOperational Risk ManagementTrinidad & Tobago Stock Trinidad & Tobago Stock

ExchangeExchangeThe OutcomeThe Outcome

Increase in STAFF to compliment Increase in STAFF to compliment departments to reduce the loss of departments to reduce the loss of key employeeskey employees

The board has agreed to have a Hot The board has agreed to have a Hot Site constructed to complement the Site constructed to complement the Disaster Recovery PlanDisaster Recovery Plan

Implementation of a Real –Time Implementation of a Real –Time Replication infrastructure at the Replication infrastructure at the Hot Site when completedHot Site when completed

Implement a network infrastructure Implement a network infrastructure that eliminates the single points that eliminates the single points of failure within the Exchange of failure within the Exchange network.network.

Operational Risk Operational Risk ManagementManagement

&&the the

Trinidad & Tobago Trinidad & Tobago ExperienceExperience

Thank You for Having Us!Thank You for Having Us!

Mr. Anthony TaittMr. Anthony TaittGeneral ManagerGeneral Manager

Trinidad & Tobago Central Trinidad & Tobago Central Depository.Depository.