Dresdner Kleinwort Wasserstein
Without clear guidelines for the measurement of operational risk, the development of any solution with the aim of compliance is commendable. For its pre-emptive efforts in this area, The Banker has selected investment bank Dresdner Kleinwort Wasserstein (DrKW) for this award.
Recognising the importance of a central operational information process, DrKW has implemented an innovative operational risk management system based on a near-real-time, rules-based workflow system that automates loss data management and measurement. Implemented globally, the centralised database enables DrKW to track and analyse loss data in detail giving it increased transparency and improved reporting capability. Today the solution has more than 1000 participants, mostly front-office staff, who have been involved in the incident capture process.
To facilitate its implementation and add value to users, DrKW has implemented specific deal and profit/loss calculation algorithms for both cash and derivative products, as well as an interest claim and funding cost engine for settlement and cash management. For other products and non-trade related incidents, a freeform profit/loss calculation engine allows for multi-cause loss explanation for all the Basel II risk event types.
DrKW has also built risk indicator and scorecard-style reporting functionality into the tool, enabling it to do time-series comparisons of operational data. The database offers the ability to drill down from high level management reports into the details of any given risk exposure or loss event. It also handles text-based issues and commentary related to the data and is a big step forward from typically unstructured information flows based on spreadsheets and e-mails. Combining both quantitative and qualitative information takes operational risk beyond pure reporting into hands-on risk management.
DrKW is finalising its operational risk capital model but now has an integrated platform for operational risk data storage and exposure calculation. The internal data can be easily benchmarked or supplemented with external data for a complete view of the bank’s potential operational risks.
DrKW is evidently at the forefront of risk management and has set a high precedent for others to match in the area of operational risk management.
