Overview

What drives the process of the controls that the Operations teams work to? The answer is that several drivers shape the control environment for operations. Key drivers are provided by the regulatory structure of the location of the business, international regulatory conventions and market best practice. However, while these drivers are enforced by external organizations there are also major controls that are implemented and managed as corporate policy. We have issues like the risk appetite of a business that determines the extent of exposures that the business is comfortable with. We also have the internal controls environment that is established to help manage the risk appetite of the business.

Operations is a term that generically covers the processes and procedures for settlement and clearing. Therefore we have controls over those processes that are to do with the functionality of operations rather than being specific to risk. Reconciling various results of the processes is in itself a control on risk but it is equally a source of data to confirm that the process is complete. We need to be careful when we talk about controls and risk management. A control designed primarily to monitor the progress of a process or a series of processes cannot necessarily be considered to be a primary risk management control. Likewise, a control that is designed to prevent unacceptable risk is not necessarily designed to track the progress of a...