BOOK: Fundamentals of Operational Risk Management, by Simon Ashby

Fundamentals of Operational Risk Management: Understanding and Implementing Effective Tools, Policies and Frameworks
Simon Ashby, Kogan Page, 2022

In Simon Ashby’s preface to his latest book, he writes that, whilst he began his risk management studies in 1991, it was not until 1999 that he first heard the term ‘operational risk’; and that in those early days, research and practice in the field was “like the Wild West”.

“It seemed that everyone had a different view on how best to manage operational risk,” he writes. “This made for an exciting and creative time, but one where practices differed extensively.”

Since that time, the practice of operational risk has greatly matured and there is significantly less difference in approach between organisations. A distillation of Dr Ashby’s vast experience in the field across this time, this book will help readers grasp the key principles of managing operational risk, and understand its value in protecting organisations from threats and losses.

Greatly admired in risk circles, Dr Ashby’s years of experience in the field means – as Argo Group’s Alex Hindson points out in his praise for Fundamentals of Operational Risk Management – that he is perfectly placed to write what may well prove to be the definitive book on operational risk.

Dr Ashby is associate professor of financial services at the Blerick Business School in Brussels. Prior to this he was associate professor at Plymouth Business School, and has worked as a financial regulator and a senior risk manager in a number financial institutions. He is, as some readers will know, a former chairman of the Institute of Operational Risk and a senior research fellow at the centre for risk, banking and financial services at the University of Nottingham.

In its 320 pages, Fundamentals of Operational Risk Management outlines how to implement a sound operational risk management framework that is embedded in day-to-day business activities.

It covers the main operational risk tools, including categorisation, risk and control self-assessment and scenario analysis, and explores the importance of risk appetite and tolerance.

This practical guide includes a number of sobering case studies of major operational risk events, to illustrate each concept; and demonstrates the value of operational risk management, and how it fits with other types of risk management. Guidance on the regulatory treatment of operational risk and the importance of risk culture is also covered.

This excellent book will prove a pragmatic tool for risk practitioners, and will also be useful in academic settings.

This review was published in the Q3 2022 issue of CIR Magazine.

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