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PRMIA/ISDA Operational Risk in E Trading

This presentation by David Woods, Managing Director at ABN AMRO, focuses on operational risk in electronic trading environments. Highlighting the differences in market and credit risk management, it delves into various risk categories including FX, IR, liquidity, and reputation risks. Woods emphasizes the importance of understanding both internal and external organizational risks, and defines strategies for minimizing mistakes and costs while accepting acceptable risk/return profiles. Key management practices for fostering a culture of risk awareness are also discussed.

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PRMIA/ISDA Operational Risk in E Trading

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  1. PRMIA/ISDAOperational Risk in E Trading London Wednesday 10th April 2002 G D Woods Managing Director +44 207 678 3633 David.Woods@abnamro.com

  2. E Risks • Aren’t really new • Market & Credit Risk work differently in an e-environment • Operational Risk more discussed Property of ABN AMRO Bank N.V.

  3. Seven Types of Risk • Inside the Organisation- People- Processes- Technology- Strategy • Outside the Organisation- Business Environment- Legal Systems- Bad Guys (Attribution - Dr Nigel Upton, LBS) Property of ABN AMRO Bank N.V.

  4. Risks that Change • FX Risk • IR Risk • Liquidity Risk • Reputation Risk • Customer Acquisition Risk • Speed Property of ABN AMRO Bank N.V.

  5. A Checklist of e-Business Risk Issues Risk Source Check Risk Issues (Attribution - Dr Nigel Upton, LBS) Property of ABN AMRO Bank N.V.

  6. What we’re trying to achieve • Lower error rates • Lower costs • Acceptable Risk/return Property of ABN AMRO Bank N.V.

  7. And the Potholes... • Mistakes are more costly • Higher 3rd party risks • Risk clustering • Resource availability • Product scalability Property of ABN AMRO Bank N.V.

  8. Management • Must understand Risks & effect on Business process • Decide on Risks • Accept Risks • Instil culture of Risk awareness Property of ABN AMRO Bank N.V.

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