Risk Assessment Sample

50 %
50 %
Information about Risk Assessment Sample

Published on June 25, 2009

Author: oaes2006

Source: slideshare.net

Description

Complete Analysis, Measure and Mitigation Proposal.

Operational Risk Risk Assessment Submitted by: Jose Luis Espinoza Authored by: Oscar Armando Espinoza Salazar Date: March Issue: Envíos de Dinero Waived Transactions Descriptive Narrative: The Envíos de Dinero had a new fee schedule that could discount or waive the transaction fee. Introduction: Customers are eligible to send money to Mexico and obtain a discount on the remittance transaction fee. To qualify the following requirements must be met: • Discount Level 1. a. Prior month average balance under $250.00 • Discount Level 2. a. New Savings Account Customer without prior month average balance or prior month minimum average balance $250.00 b. The transfer must be to a Mexico account or Envío de Dinero card. Country Amount Discount Discount Level 1 Level 2 Mexico 1 - 1,000 $3.00 $8.00 1,001 - 2,000 $4.00 $12.00 2,001 - more $5.00 $20.00 1

Operational Risk Analysis A. Transactions and Face Value The Transactions and Face Value analysis was based on information provided by System1 and BTS2. . U.S. Dollars Average per Transaction: January $ Median weekly earnings from painters, construction and maintenance $494.003 employees: Average Monthly Fee Income: January Average Fee Income per Transaction: January $ Average Monthly Foreign Exchange Income: January Average Foreign Exchange Income per Transaction: January Note: The above data does not consider the Change of Instructions fee, transactions and face value. 1 Money Transfers Transactions and Face Value, Business Intelligence Center (BIC) inquiries from MIS area of the Finance Department. January 2 “REAL Sales Report ACTUAL” from Armando Guijarro (Former Controller Officer) and “Real up to .xls” excel monthly report from MIS area of the Finance Department. 3 U.S. Department of Labor, Bureau of Labor Statistics. “Household Data Annual Averages”, 39. Median weekly earnings of full-time wage and salary workers by detailed occupation and sex 2004. Page 253. 2

Operational Risk Chart 1: Total Transactions Cycle (Number of Transactions)4 TOTAL TRANSACTIONS 20XX TOTAL TRANSACTIONS 20XX TOTAL TRANSACTIONS 20XX TOTAL TRANSACTIONS 20XX TREND XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX R R R Y R Y ST H BE IL E LY BE AR BE AY AR BE C N R U AR JU EM M EM JU M U AP TO U G BR VE N AU M PT EC C JA O FE O SE D N January- April May June- August Oct Nov Dec March July Chart 2: Total Face Value Cycle (in thousands) TOTAL FACE VALUE 20YY TOTAL FACE VALUE 20YY TOTAL FACE VALUE 20YY TOTAL FACE VALUE 20YY TREND XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX R R R Y Y R ST H IL E LY AY BE AR BE BE AR BE C N R U AR JU M EM JU M EM AP U TO U G BR VE N AU M PT EC C JA FE O O SE D N 4 The transactions do not include the Receiver Name Modification (RNMs). 3

Operational Risk Chart 3: Total Number of Branches and Average Monthly Sales per Branch (in thousands) Number of Branches Average Face Value per Branch XXX YYY XXX XXX XXX XXX YYY XXX YYY XXX XXX XXX XXX XXX YYY XXX XXX YYY XXX YYY XXX XXX YYY XXX YYY XXX YYY YYY XXX YYY XXX YYY - Chart 4: Average Monthly Sales per Branch (in thousands) XXX -35% YYY From January From August 4

Operational Risk Table 1: Average Monthly Transactions per Branch (Number of Transactions) AVG BRANCH HISTORICAL NAME MONTHY TYPE TRANSACT DATA FROM TO CONVERTED / Top 5 CONVERTED / Top 5 CONVERTED / Top 5 CONVERTED / Top 5 CONVERTED / Top 5 NEW NEW NEW NEW NEW NEW NEW NEW NEW NEW VB NEW VB VB VB 5

Operational Risk B. Fees and Discount The analysis is based on information provided by System5, Marketing and Product Department6 and BTS7. Diagram 1: Envíos de Dinero New Promotion / New Fee Schedule (Effective Feb 19th, 20XX)+ Non Customer Customer Customer Country Amount Fee Fee * Fee ** 1– 8 5 0 1,000 Mexico – 8 0 1,001 2,000 12 0 – 2,001 more 20 15 1– 8 8 8 El Salvador Honduras 1,000 – Guatemala Colombia 1,001 1,200 15 15 15 – Nicaragua Argentina 1,201 1,500 20 20 20 – Dominican Rep. Ecuador 1,501 more 30 30 30 1– 20 1,000 20 20 Uruguay – 30 1,001 1,200 30 30 Bolivia – 40 1,201 1,500 40 40 – 50 1,501 more 50 50 * Conditions ** Conditions Bancomer Savings 1. Savings Customer 1. Savings Customer Previous Customermonth average balance >= 2. Previous month average balance >= $250 $250 3. Transfer to an account +Marketing and Product Department Presentation. 5 “Promo MTfinal- javier.xls”, Business Intelligence Center (BIC) inquiries from MIS area of the Finance Department. June 6 “Branches Committee Feb Marketing”, Power Point Presentation from Marketing and Product Department. February 7 “8606 –Agent Activity detail / Commissions and Fees”, MSB Platform Version 1.1.9.9 report. February 6

Operational Risk Diagram 2: Systems involved in the Envíos de Dinero Promotion. Metavante Teller Insigth Teller Insigth MSBPlatform Version 1.1.9.9 (POS) Systems are completely independent. I. Teller Insight June Number of % Transaction s Promotion Money Transfer Inquiries 100% Match with POS Transactions % Match with POS Transactions and % Discount Applied 7

Operational Risk Chart 5: Money Transfer Promotion Inquiries (Number of Transactions) Total Inquiries Total Match POS XX XX XX XX XX XX YY YY YY YY XX YY YY YY XXYY XXYY Jun Jul Aug Sep Oct Nov Dec Jan Feb 20XX 20YY Table 2: Money Transfer Promotion Inquiries by branch (Number of Transactions) Total Total Effective Branch Name Inquiries Match POS ness *Information from June 1 67% 2 68% 3 73% 4 64% 5 60% 6 66% 7 66% Total Total Match 8 55% Branch Name Effectiveness Inquiries POS 9 51% 10 34% Max 11 64% Min 12 71% Mean 13 71% Standard Deviation 14 75% Median 15 56% 16 70% 17 70% 18 69% 19 53% 20 71% 21 55% 22 66% 23 71% 24 62% 25 76% 26 74% 27 54% 28 65% 29 72% 30 78% 31 63% 32 20% Grand Total 62% 8

Operational Risk II. MSB Platform (POS) Table 3: Waived Transactions by Movement Type (June ) CAN SALE NET SALE # C $ # CONF $ CONF # $ REFU # ND $ RN # M $ Total Of # Net $ Chart 6: Waived Transactions Analysis (June )) Discount POS Transactions NO MATCH DISCOUNT NOT 66% APPLIED 6% , 33% 28% DISCOUNT APPLIED TOTAL: MATCH 9

Operational Risk Chart 7: Waived Transactions History (July )) REFUND RNM NET SALE CONF XX YY X YY XX Z X X Y YY XX X YY X XX Z Z YY Y Z XX Z Z Y Z Z YY Z XX Z YY Z Z Z Z XX Z X Z YY YZ Z Z Z Z 0 0 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 10 11 12 10 11 12 20XX 20YY 20ZZ Table 4: Waived by Destination (July ) Destination Transactions % Transactions Fees % Fees Discounts % Discounts MEXIC O SALVADOR EL PERU GUATEMALA ARGENTIN A ECUADO R NICARAGUA COLOMBIA BOLIVIA HONDURA S BRAZIL INDIA Grand Total Average Discount per Transaction Mexico Others 10

Operational Risk Table 5: Waived by Branch (excluding Mexico destination) *Information from July Branch_Name Transactions % Transactions Fees % Fees Discounts % Discounts 12% 11% 13% 15% 13% 11% 9% 9% 8% 9% 11% 8% 5% 6% 7% 5% 6% 6% 5% 5% 6% 7% 8% 6% 3% 3% 4% 1% 3% 4% 4% 3% 3% 3% 2% 3% 4% 3% 3% 3% 2% 2% 2% 2% 2% 1% 1% 2% 2% 1% 2% 1% 2% 1% 2% 1% 1% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 1% 1% 0% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% Grand Total 100% 100% 100% Max 13% Min 0% Mean 3% Standard Deviation 3% Median 2% Table 6: Waived Monthly Average (excluding Mexico destination) Transactions Discount Discount Note Monthly Average Monthly Average Variation 136% New branches and Promotion 25% New Fee Schedule 11

Operational Risk Chart 8: 20XX Waived (excluding Mexico Destination) - XXX XXX (YY) XXX (YY) XXX 37% XXX (YY) 32% Promotion / Feb 19 XXX 20XX_January 20XX_February 20XX_March Chart 8: Number of Discounts by Amount (excluding Mexico Destination) XX X XX 1 Y 1.6 2 XX 2.5 X 2.9 3 XX 4 Y 5 6 XX 7 8 X 10 XX 12 14 15 XX Y 18 X 20 25 XX 30 40 XX 50 0 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 10 11 12 10 11 12 20XX 20YY 20ZZ 12

Operational Risk Table 7: Top Discounts by Customer (excluding Mexico destination) Customer Name Customer Name POS Destination Branch_Name 20XX 20YY 20ZZ Grand Total NOTE -600 Security -136 -278 -2 -416 -30 -169 -148 -347 -215 -100 -315 -246 -8 -249 -257 -170 -56 -226 -192 -184 -24 -10 -122 -156 -180 -160 -8 Utilities -151 -159 -150 C. Mystery Shopper8 Telephone call directly to the branch: Do I have to pay a fee for a change of recipient if I sent my transfer with the promotion and to an account? Branch Result Note Visit the branch and it will We are creating be decided at that customer expectation. moment. Yes The system is unable to do it. Yes The system is unable to do it. No, the system is THIS IS THE CORRECT unable to bring the ANSWER. money back from an account in Mexico. 8 Compliance Department on April 14, 20XX. Random branch selection. 13

Operational Risk D. Transactions Review The branches were reviewed for existence of documentation according to the Policy and Procedure9 Table 8: Number of Transaction Reviewed (Discount Transaction between ) Discount % Reviewed Branch Reviewed Total Transactions (Reviewed/Transactions) 20XX 20YY 1245 27 2% 0 27 27 To Mexico 1441 23 2% 0 23 23 Total 2,686 50 0 50 50 To Other 580 29 5% 11 18 29 Country 302 21 7% 4 17 21 Total 882 50 15 35 50 1825 56 3% 11 45 56 Total 1743 44 3% 4 40 44 Total 3,568 100 15 85 100 Table 9: Results Reviewed Transaction Discount Transactions Account Document No Branch Branch Holder with Incorrect Storaged Employee No Description Manager No Account Destination (Not in Signature Number Branch) To Mexico 0 2 1 0 13 0 (50) 4 2 0 1 2 0 Total 4 4 1 1 15 0 8% 8% 2% 2% 30% 0% To Other 0 3 0 3 3 9 Country (50) 0 0 0 0 9 18 Total 0 3 0 3 12 27 0% 6% 0% 6% 24% 54% Total 0 5 1 3 16 9 (100) 4 2 0 1 11 18 Total 4 7 1 4 27 27 4% 7% 1% 4% 27% 27% 9 Intranet, IT & Operations/ Operations/ Waiving a Transaction Fee http://intranet.pri/Intranet/Policies.aspx as of April 17, 20XX. 14

Operational Risk E. Policy and Procedure10 1. Promotional Campaigns 1• M 2. Special Circumstances 1• A 0 2• 3 4• T 3. Documentation 1• A 2• T 3 e.g.: Account Holder X _____________________ e.g.: Problems with previous Wire Transfer X _____________________________ e.g.: Employee Benefit X _____________________ 4. Management discretion 1• A •T 10 Intranet, IT & Operations/ Operations/ Waiving a Transaction Fee http://intranet.pri/Intranet/Policies.aspx as of April 17, 20XX. 15

Operational Risk Risk Assessment Description of Risk Factor: Incorrect application of the discount or waive fee on the Envíos de Dinero process to countries other than Mexico. Methodology: Direct. Historical experience provides records of previous losses. Areas / Function / People: Branch Employees. Loss Type: Direct. Loss is clearly identifiable. Risk Class Name: PROCESSES (PR). Risk Class Code: 102.Ineffective Control (Ineffectiveness in the control of operations). Magnitude of the Loss (Severity): Level 3. The risk factor can cause a loss between $100.00 to $1,000.00 U.S. Dollars. The amount is defined based on the Averaged Discount Transactions from July (Excluding Mexico). The average is ( )= per Discount. Frequency: High. The risk factor happens more than one time per year. Annual Loss Frequency (Probability): Scale 11. The risk factor happens about xxx times per day ( annual occurrences). The occurrence is based on transactions, which represents a monthly average of times 12 months. Potential Economical Impact/Loss: $000 * =$ 16

Operational Risk Conclusion The incorrect application of the discount or waived fee on the Envíos de Dinero to countries other than Mexico stands for a potential annual economic loss of . The Branches misunderstanding of the application of the Envíos de Dinero Promotion may result in the incorrect discount of fees. Recommendation • Enforce the correct operation of the discount transaction on the Branches: o System  Teller Validation of the Customer as winner on the Promotion Money Transfer option. o POS System  Include the savings account number in the customer information and verify that this number match with the record on Teller Insight.  Add a pop up screen to request manager’s authorization to process a discount transaction. Branch Manager, Assistant Manager, Operation Support or Sales Associate should have the authorization to approve a discount.  Keep records of the officer that approved the discount.  Modify the payment order application receipt to include space for the following: • Date • Type of promotion • Customer’s signature as acknowledgement • Amount waived • Officer that authorized the discount. o Employees  Reinforce training on the Envíos de Dinero Promotion / New Fee Schedule for those branches with a high error ratio. • Provide a simple Check list to the Branches that will assist the Teller to verify the following: o That the customer has a Saving Account o That the money transfer destination is Mexico o That it is a Level 1 Discount  Saving Account under $250.00 o That it is a Level 2 Discount  New Savings Account Customer without prior month average balance or prior month minimum average balance $250.00  The transfer must be to a Mexico account or Envío de Dinero card. 17

Operational Risk • Dedicate time to the former Bank branches in order to promote the Money Service Business (MSB) products, Envíos de Dinero and Check Cashing, due to the low volume operate. 18

Add a comment

Related pages

EXAMPLE OF RISK ASSESSMENT FORMAT - English | IPAF

EXAMPLE OF RISK ASSESSMENT FORMAT This sample form is intended to help you make a risk assessment in the use of machinery. These bullet points are purely ...
Read more

DETAILED RISK ASSESSMENT REPORT v2 - IT Security

This is sample data for demonstration and discussion purposes only Page 1 DETAILED RISK ASSESSMENT REPORT Executive Summary During the period June 1, 2004 ...
Read more

Risk management: Example risk assessments - hse.gov.uk

HSE sets out example risk assessments to help you see what a risk assessment might look like.
Read more

Risk Assessment | Ready.gov

A risk assessment is a process to identify potential hazards and analyze what could happen if a hazard occurs. A business impact analysis (BIA) is the ...
Read more

Risk Assessment Reports - European Banking Authority

EBA Risk Assessment Reports. The Risk Assessment Reports provide a semi-annual update on risks and vulnerabilities in the EU banking sector. They describe ...
Read more

Anti-Money Laundering Risk Assessment & Customer

Anti-Money Laundering Risk Assessment and. Customer Due Diligence—a Global Perspective. Risk Solutions Financial Services. June 2013
Read more

Sample Risk Assessment Form : OSH Answers - CCOHS

OSH Answers Fact Sheets. Easy-to-read, question-and-answer fact sheets covering a wide range of workplace health and safety ... Sample Risk Assessment Form.
Read more

General Health and Safety Risk Assessment Example 1

General Health and Safety Risk Assessment Example 1 No Firm/Company Department Contact Name Nature of Business Telephone No Principal Hazards
Read more

RISK ASSESSMENT FORMS AND TEMPLATES – Free! — SafetyRisk.net

Huge collection of free risk assessment forms, risk assessment templates, Risk Registers, Checklists, completed examples and risk assessment guidelines
Read more

Risk Assessment - Health and Safety Executive

We have started off the risk assessment for you by including a sample entry for a ... For further information and to view our example risk assessments go ...
Read more