Case Study Operational Risk 2015

Andreas Weingessel
The company Best Fabulous Industry (BFI) intends to outsource its Accounting department
to an East-Asian country. In the future, all bills should be processed and paid in this newly
founded entity. Additionally, this entity will be responsible for creating the yearly account
statements of BFI.
As person responsible for Operational Risk in BFI you are asked to carry out an Outsourcing
Risk Assessment and Scenario Analysis, and present your results in a concise report to the
Board.
For the Cast Study please prepare the following:
1. A proposal for a Risk Assessment. For each of the 7 Basel Loss Categories define at
least 1 question which covers a particular risk for the respective loss category. (Please
add the corresponding loss category to each question.)
2. A proposal for Scenario Analysis. For the 2 highest risks (according to your opinion)
prepare 2 Scenario Analysis workshops. Please describe
a. who of BFI company should be invited to the respective workshops,
b. which information you would gather in preparation for the workshops, and
c. the most important steps in the workshops.
3. Based on the fictitious result of the risk assessment and the scenario analysis, prepare
a report to the Board containing
a. the result of the Risk Assessment and the Scenario Analysis,
b. a proposal of at least 2 Key Risk Indicators which should be implemented, and
c. at least 5 proposals to control and mitigate the operational risk of this
outsourcing project.
Note on the Case Study: For the grading of the case study, it is not important whether you
exactly identify and estimate all the risks of such a project. It is important to give a
reasonable and realizable proposal for risk assessment (1) and scenario analysis (2) and to
prepare the report (3) in a form that it could really be presented to a board of a company.