Summary: Traditional reviews of a firm's exposure to events such as unauthorised trading give a false sense of security. Firms need to investigate the sensitivity of controls to changes in their effectiveness and to develop a clearer understanding of the speed at which such changes are picked up and acted upon.

Chase Cooper believes that traditional methods of identifying exposure to rogue trading are flawed, give a false sense of security and fail to highlight the real risks that firms face. Firms need to continually apply scenarios to investigate the circumstances under which losses can occur.

Professor Tony Blunden, Head of Consulting at Chase Cooper and co-author of the acclaimed book Mastering Operational Risk commented "Firms should not just be asking 'could it happen here?' but should be asking 'what would need to occur before it happens here?'. The key issue is the relationship of a firm's exposure to degradations in controls, and the time frame in which they take place.

The sensitivity to change is too often ignored in the analysis of control environments. If Boards' ask the wrong question it is inevitable they will get the wrong answer".

Chase Cooper has developed a series of scenario based workshops which will focus on the exposure of firms to changes in their control environment and enable firms to obtain an understanding of their true exposures.

Professor Blunden further commented "merely understanding current controls is not enough, firms need to establish a culture whereby a continuing process of evaluation of potential points of failure is the norm".

Download Further Information

PDF: Metric Special Edition: Will your bank be the next? How to deter your own rogue traders

PDF: Rogue Trading - How can it happen here?

About Chase Cooper Ltd.
Chase Cooper is a dynamic risk and compliance management solutions provider. Headquartered in the UK, it provides unique all round solutions to the global financial sector for Enterprise Wide and Operational Risk, incorporating leading frameworks such as Basel II, COSO, FERMA, SOX, Solvency II and ICAAP. With a client base in 84 countries, its award winning software solution, aCCelerate, is a combination of a highly effective modern architecture providing a market leading user intuitive approach to risk management, supported by a unique combination of award winning consulting services, resourcing and training.

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