Understanding areas of greatest risk
The insurance company wanted to identify major areas of operational risk so that it can mitigate, transfer, or eliminate key risks to its business.
An operational risk assessment
To complete a comprehensive risk assessment, the organization worked with a team from West Monroe Partners that combines deep insurance and financial services experience with distinctive skills in operational risk identification and management.
A project team comprised of both consultants and client personnel examined more than 70 process areas, using an operational assessment matrix with a detailed list of questions to identify the company’s exposure to process risks. The team also created a customized weighting system and used it to prioritize 15 process areas for further evaluation and assessment. The project team then analyzed each of the 15 prioritized processes. It used workflows, subject matter experts, and operational risk assessment tools to identify gaps related to roles, responsibilities, systems, reports, forms, policies, and procedures. The team then employed a proprietary “data dictionary,” a custom-built Microsoft Access database tool, to document each process area’s risks and gaps, as well as recommended strategies for controlling the risks.
Finally, the joint team presented results of the evaluation to the company’s executive committee.
Knowledge and insight for future risk management
This project provided the insurance company with important insight, based on a proven risk assessment approach, which will enable it to mitigate or eliminate current operational risks. Furthermore, the project provided the company with tools and knowledge that will aid in future risk management. For example, the company can use the data dictionary to monitor and eliminate process risks without ongoing consulting assistance, and it can use the workflow diagrams and other operational risk assessment tools to identify risks on an ongoing basis.