Building Your Analytics for More Data-Driven Operational Risk Management

Enable an understanding and preparedness of what may not yet be a current risk exposure, but could be an emerging risk to watch out for

How could the transition towards data-driven non-financial risk management look?

• A starting point could be to decide what to measure – e.g., set a risk appetite and then analyse which data points can inform on this.
• Then building these into analytics solutions enabling more continuous monitoring.
• Typically, data must be sourced from several sources and is not necessarily easily accessible, so that’s a challenge to address.
• Another challenge is data quality and how to ensure this (e.g., putting requirements on data governance).
• Ensuring access to data and data quality enables building analytics, incl. advanced analytics, solutions.

How to use data to become more forward-looking?

• Finding good forward-looking risk indicators can be quite challenging.
• One source of information can derive from the analysis of incidents/news stories concerning peers. E.g., at Nordea, we are part of an industry organisation where we exchange our incident loss data with peers and via our membership we also receive news stories and surveys of e.g. horizon and top risks identified by the different members.
• Combining internal and external data and applying different modelling techniques can enable forecasting.
• Processes like scenario analysis also enable an understanding and preparedness of what may not yet be a current risk exposure, but could be an emerging risk to watch out for.

How does becoming more data-driven impact strategic workforce planning?

• Increased use of data and analytical tools shift the needed competence profile towards a higher degree of quantitative skills.
• Besides dedicated quantitative analysts/data scientists, traditional operational risk officer profiles will also continue to be needed but with a twist towards being able to also work more with data and use of analytics tools.

Marie Leth Christensen is currently a Head of Operational Risk Analytics and Monitoring at Nordea Bank Abp. She is responsible for areas pertaining to Operational Risk analytics, capital modelling, stress testing, monitoring, reporting and frameworks. Marie has been with Nordea for 16+ years in various roles within the business and the second line of defence.