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Technology and Operational Risk ManagementBy CIOAdvisor Apac | Wednesday, May 01, 2019
Businesses have been already using advanced analytical capabilities and the vast amount of data, which is being continuously added, highlights the need for the risk management tools. Operational risk managers have a chance to boost their company's risk exposure assessment more closely to real-time. Predictive analytics offers the opportunity to increase the quality of actionable insights dramatically. Risks can be mitigated faster as anomalies become more visible.
Predictive risk intelligence through the use of advanced analytics to recognize patterns, and correlation and causal analysis give operational risk managers a chance to catch up to identify potential risk building and the need for remedial action.
Move toward predictive risk intelligence has been taking place over the past 12–18 months. Globally, more organizations are attempting to make their oprisk management programs more forward-looking. Banks have been looking for ways to improve their traditional oprisk management practices for a long time. While historical data on operational losses continue to be the basis for compliance with regulatory capital rules, such data has been a blunt tool for controlling loss and risk profiles. In the earlier days, the tools and technologies needed to make correlations and predictions more informative did not exist
Check out: Top Predictive Analytics Companies
However, institutions can still build these capabilities with increased ease and less investment with big data science. Typically, the difficulty lies in scoping which type and data range will be relevant for obtaining the desired results from the model.
Several vendors offer embedded capabilities for predictive analytics that can be used in business processes. Embedded analytics can help organizations gain the visibility needed to understand and influence current and historical results. Embedded predictive analytics also enables organizations to predict system health and trigger alerts or recommend corrective actions that can assist in ensuring that systems perform as expected.
Looking to the future, if technological advances to enhance business functions are inevitable, organizations need to mobilize efforts to assess the impact of such changes on operational risk management.