TA structured monitoring and reporting framework
Managing By Signals®, and the sfn® software, establishes a structured monitoring and reporting framework around your key processes and controls. Based on the proven approach of statistical process control this supports the key requirements of any enterprise risk management framework.
Specifically sfn®:
- Shows the way in which individual indicators relate to your end to end process so helping you to identify and continuously revalidate the key controls within your organisation.
- Uses a common definition of exceptions so allowing you to monitor the performance of your key indicators over time and trigger actions when there is evidence that they are moving outside acceptable tolerances.
- Identifies issues where a root cause analysis of poor performance or unacceptable risks is required so that they can be addressed systematically.
- Predicts possible adverse outcomes from trends in the data so that corrective action can be taken promptly.
- Measures the cost of operational risks in order to optimise effectively the costs and benefits of potential control enhancements.
In addition, Managing By Signals®, provides a structure and framework for consistent enterprise-wide reporting on the condition of your key processes and controls. Most of the methodologies that firms have used to date for reporting on key processes are relatively unsophisticated. They lack any formal data structure and are historical in nature. Typically they consist of audit reports, the results of internal self-assessments and measures of performance against targets which are set by reference to expert judgement. The limitations of this approach are increasingly becoming clear.
By automating the process and drawing on the disciplines of statistical process control, sfn® helps you to overcome many of the limitations of the traditional approach by providing you with:
- A common and easily understood measurement methodology and data structure for the whole enterprise.
- The ability to analyse the causes of exceptions by drilling down to the underlying transactional data.
- The ability to understand the causal linkages between different indicators through correlation analysis.
- The ability to identify quickly where best practice exists in your organisation through the benchmarking of similar activities and processes and to use this to assist learning and knowledge transfer to other areas.
- An audit trail which records where exceptions have been identified and the related explanations and management actions that have been taken to address these issues.
- The early identification of common issues and trends across the enterprise which, if left unaddressed, may be precursors of more serious problems in the future.
- A measurement methodology which allows you to assess the potential contribution of Operational Risk to earnings variability in a similar way that is possible for other risk factors such as credit and market risk.