Zsuzsanna Tamásné Vőneki
Banking on improved risk management
OTP Group reduces losses, improves capital and liquidity positions with SAS® OpRisk Management
For the financial services industry, risk is an inherent part of doing business. In recent years, corporate wrongdoing and market woes have put risk – and the consequences of poorly managing it – front and center. Record transaction volumes and demands for speed and automation have escalated the cost of managing risk. So have regulatory changes that now hold board members and executives personally accountable for their decisions.
The bank is able to reduce its losses and, in the long run, will introduce controlled processes to lower its rate of mandatory capital reserves, which could generate surplus liquidity of up to several million euros annually.
Zsuzsanna Tamásné Vőneki
An automated approach
To comply with the regulatory pressures of the Basel II Capital Accord and the Hungarian Financial Supervisory Authority (PSZÁF), the bank needed to enhance its ability to identify and prevent risks and establish a stable capital and liquidity position, as well as apply increased prudence in its provisioning practices.
To do this it needed an automated approach to operational risk management, with a process-based information system to improve data management. Along with mandatory reporting, and data integration with multiple operational systems, OTP required a standardized business analytics solution that could be shared with its subsidiaries and supported locally by IT.
To address its risk management challenges, the bank uses SAS to collect, manage, track and report information about operational loss events, key risk indicators, risk-assessment maps and control-assessment scores.
"The group-level capabilities offered by SAS were very important to us. SAS' solution covers all the functionality required by OTP and they offered a fast-track implementation," says Zsuzsanna Tamásné Vőneki, Head of Country and Counterparty and Operational Risk Management, OTP Bank. "As well, SAS is present in all of our subsidiary countries, which means it can provide international product support to the group."
The fast-track implementation was a key requirement for OTP, as it was under a tight regulatory deadline. It had only a couple of weeks to implement the new system – define risk types, understand processes, standardize and upload data, and complete testing. To further complicate the implementation, the new system had to integrate with the bank's standardized, proprietary authorization management framework. Currently, the system stores more than 50,000 events and has more than 500 users at 15 subsidiaries in nine European countries.
"While the SAS solution has been up and running for only a short time and the development of the appropriate processes is still underway," says Tamásné Vőneki, "the application manages highly diverse processes consistently, which is a major improvement over the old, manual approach to data management.
"Using SAS, it requires less effort and time to provide credible information for operational risk management purposes. Using the system on a group level, the bank is able to reduce its losses and improve its capital and liquidity positions."
Identify and prevent risk; establish stable capital and liquidity position; apply increased prudence in provisioning practices; apply a standard business analytics solution across subsidiaries.
Reduce loss, free up capital, protect liquidity, provide credible decision support with less time and effort.