In a series of papers published between 1999 and 2001, the Basel Committee on Banking Supervision (BCBS) delineated operational risk as a distinct and controllable risk category in its own right. Despite this, in the 20-plus years that operational risk has been managed by financial institutions, there are still areas where significant improvements are still required such as cybersecurity, fraud, and, perhaps more surprisingly, dealing workflows.

Unlike market-oriented operation risk, which is concerned with everything from product complexity to rogue trading, workflow-related risk stems from opaque and error-prone manual processes. 

In this regard, voice- and even chat-based transactions are a prime culprit. These are by nature human-centric processes and as such are error-prone. As dealers set out RFQ’s or look to match interests, discover prices, or book trades across pre- and post-trade processes, manual processes increase the risk of breaks in workflow, or discrepancies emerging between counterparties. There are cost implications, too. Regulations stipulate that banks set aside funds to cover potential losses stemming from operational issues. Workflow inefficiencies, therefore, show up as a cost on the balance sheet.

For financial institutions looking to solve this problem, the answer lies in end-to-end digitized workflows that make use of process automation. The Wematch Platform is an industry leader in this field. We have coded the behaviors needed to execute pre- and post-trade workflow so that traders can conduct their business with a few clicks – so no need for those chat or voice calls where errors so frequently creep in. As a digital platform, Wematch also provides a complete audit trail for trades, providing a significant boost for internal compliance teams. What’s more, the Wematch platform provides a single, “golden” source of data for all counterparties, so it is quick and easy to ensure that there are no data discrepancies. 

Get in touch if you want to learn more about how Wematch can help you reduce your operational risk.

The views and opinions expressed are for informational and educational purposes only as of the time of the writing/production and may change at any time. The material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.