The Impact of ESG on Retail Banking Operational Risk
As the impact of sustainable risk on banks increases, retail banking operational risk position needs to consider sustainable regulatory policies and standards that may affect banking operational risk. Retail banking operational risk position should regularly review and update operational risk management policies and frameworks to avoid legal and reputation risks.
The retail banking operational risk position also needs to combine the business continuity framework and operational risk management framework to identify whether sustainable development has an impact on infrastructure, systems, processes, and employees, as well as the physical and transition risks of these impacts.
Related Post: ESG Job Introduction: Retail Banking Market Risk
How to Apply ESG in Retail Banking Operational Risk
Retail banking operational risk may apply ESG in the following tasks:
| Key Points | Tasks |
| Monitor and report operational risk exposure | 1. Ensure that sustainable regulatory policies and standards are incorporated into risk monitoring and supervision work 2. Understand the latest developments in sustainable regulatory policies and industrial trends, and update risk management framework 3. Determine and apply sustainable risk monitoring tools 4. Understand and implement benchmark tests for sustainable policies |
| Establish a culture of risk awareness and risk management | 1. Ensure consistency between sustainable risk policies and the bank’s risk framework 2. Develop and implement trainings to enhance the operational team’s ability to identify, monitor, and mitigate sustainable risks |
| Manage Business Continuity Management Framework | 1. Regularly evaluate business plans to test their compliance with sustainable regulatory policies 2. Develop and maintain a business continuity management framework based on the impact of sustainable scenarios on banking infrastructure and systems |
| Manage Operational Risk Management Framework | 1. Conduct operational risk analysis based on sustainable data to identify losses caused by sustainable factors 2. Update the operational risk management framework to reflect regulatory policies and trend changes related to sustainable risks |
| Implement controls and risk management activities | 1. Monitor operational risk management activities to track their effectiveness in addressing sustainability related operational risks 2. Develop and implement mitigation activities to address operational risks related to sustainability (such as regulatory compliance, data privacy, etc.) |
Retail banking operational risk position will need to apply climate change management and sustainability risk management skills.
Reference:
Monetary Authority of Singapore
Institute of Banking and Finance Singapore
Jobs Transformation Map – Sustainable Finance
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