Top risks and controls for Operations

From the Doorstep International risk register, curated by Ahmer Nehal. Last updated 17 Oct 2026.

The Operations register lists 33 key risks and 78 best-practice controls across 6 units: Customer Service, Deposit Operations, Fraud and Risk Management, Loan Operations, Payment Operations, Treasury Operations. Use it to identify risks, benchmark your existing controls or start a risk and control self-assessment (RCSA).

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AI-era lens: operations is where automation and AI agents now process payments, reconciliations and customer requests. The classic risks below still apply, and errors can now be executed at machine speed. See continuous control monitoring for how to keep up.

The operations function is crucial to a bank's risk management.

Due to the growing complexity of the banking sector, it is now crucial for banks to recognise, evaluate, and manage any potential risks that can occur in the course of their regular business.

This process includes risk assessments, which enable operations management to analyse the possibility and impact of certain hazards and take the necessary precautions to reduce them.

Ineffective risk assessments can lead to considerable financial losses, damage to one's reputation, and even regulatory penalties.

To guarantee that the bank runs in a controlled risk environment, it is crucial for the operations management department to carry out frequent risk assessments.

Customer Service: key risks and controls

In charge of giving customers support, which includes responding to questions and addressing problems with account balances, transactions, and other banking services.

Risk	What can go wrong	Best-practice controls
Complex banking products	Commercial banks offer a wide range of products and services, which can be complex and difficult for customers to understand. Customer service representatives must be well-versed in the bank's products and services, and be able to explain them clearly to customers.	Robust Training and Education Programs: Implement comprehensive training and education programs for customer service representatives to ensure they have a deep understanding of the bank's products and services. This should include regular training sessions, workshops, and continuous education to keep representatives up to date with any changes or new offerings. Standardized Product Knowledge Documentation: Develop standardized and easily accessible documentation that provides detailed information about each product and service offered by the bank. This documentation should be regularly updated and readily available to customer service representatives, enabling them to provide accurate and consistent information to customers.
Difficult customers	In some cases, customers may be angry, rude, or uncooperative, which can be challenging for customer service representatives. Representatives must be able to handle these situations professionally and effectively, while still providing excellent service.	Provide Customer Service Representatives with Training: Providing customer service representatives with effective training on how to handle difficult customers can be one of the most effective controls to mitigate this risk. Such training can include de-escalation techniques, active listening skills, and empathy training. Develop Clear Policies and Procedures: Clear policies and procedures can help customer service representatives understand how to handle difficult situations and provide consistent service to customers. These policies should outline the steps to take when dealing with difficult customers and provide guidance on how to escalate issues when necessary. Monitor Customer Interactions: Regular monitoring of customer interactions can help identify areas where representatives may need additional training or support. This can also help identify trends or patterns in customer behavior that may require changes to policies or procedures.
High call volume	Customer service representatives in a commercial bank's operations department may receive a high volume of calls, which can be overwhelming and stressful. This can lead to burnout and decreased job satisfaction.	Workload Management: Implementing effective workload management strategies can help distribute and balance the volume of calls among customer service representatives. This can involve employing workforce management tools to forecast call volumes and schedule staff accordingly, allowing for adequate breaks and rest periods, and implementing strategies for handling peak call times. Training and Skill Development: Providing comprehensive training and skill development programs for customer service representatives can enhance their product knowledge and communication skills. This equips them to handle customer inquiries more efficiently and effectively, reducing the likelihood of stress and burnout.
Language barriers	In a multicultural society, customer service representatives may encounter customers who speak different languages or dialects. This can pose a significant challenge in terms of communication, which can lead to misunderstandings and frustrations on both sides.	Multilingual Customer Service Representatives: Hiring customer service representatives who are proficient in multiple languages or have a diverse language skillset is the most effective control. By having representatives who can communicate effectively with customers in their native language or preferred language, misunderstandings and frustrations can be minimized, leading to improved customer satisfaction. Language Training and Education: Providing language training and education to customer service representatives is another effective control.
Security and confidentiality	Banks handle sensitive financial information, which requires strict security and confidentiality measures. Customer service representatives must be trained to handle customer information appropriately and follow proper security protocols.	Access Controls: Implementing strict access controls is crucial to prevent unauthorized access to sensitive financial information. This involves a combination of physical and logical controls, such as secure access cards, biometric authentication, strong passwords, and role-based access permissions. By restricting access to only authorized individuals, the risk of unauthorized disclosure or misuse of customer information is significantly reduced. Encryption: Encrypting sensitive financial information both during storage and transmission is an essential security measure. Encryption ensures that even if the data is intercepted or accessed by unauthorized individuals, it remains unreadable and unusable. Strong encryption algorithms and secure key management practices should be employed to safeguard customer information.
Time constraints	Customers often expect immediate assistance when they call customer service, which can be challenging for representatives who are juggling multiple calls and responsibilities. Customer service representatives must be able to work efficiently while providing high-quality service.	Implement call routing and prioritization: This involves using technology to automatically route calls to the most appropriate representative based on factors such as the customer's issue, the representative's expertise, and the representative's current workload. This can help ensure that representatives are not overwhelmed by multiple calls at once, and that customers are connected with the most qualified representative as quickly as possible. Provide training and coaching: Customer service representatives should receive ongoing training and coaching to help them develop the skills they need to work efficiently while providing high-quality service. This could include training on time management, multitasking, active listening, and problem-solving, as well as coaching on specific customer interactions. Use customer service software: Customer service software can help representatives manage multiple tasks and interactions at once, making it easier for them to work efficiently while still providing high-quality service. This software can include features such as call logging, customer relationship management (CRM), and automated workflows, all of which can help representatives stay organized and focused on the task at hand.

Deposit Operations: key risks and controls

Accountable for keeping customer account balances and transaction records as well as processing customer deposits, including cash, cheques, and electronic transfers.

Risk	What can go wrong	Best-practice controls
Compliance with regulatory requirements	The banking industry is heavily regulated, and Deposit Operations must comply with a range of regulations, including the Bank Secrecy Act (BSA), the USA PATRIOT Act, and the Anti-Money Laundering (AML) laws. Compliance with these regulations requires continuous monitoring, reporting, and adherence to strict guidelines.	Policies and Procedures: Establishing comprehensive policies and procedures that outline the requirements of the Bank Secrecy Act (BSA), the USA PATRIOT Act, and Anti-Money Laundering (AML) laws is vital. These policies should provide clear guidance on monitoring, reporting, customer due diligence, record-keeping, and other compliance-related activities. Regularly reviewing and updating these policies to align with changing regulations is essential. Training and Awareness: Conducting regular training programs to educate employees about the regulations and the importance of compliance is critical. Training sessions should focus on familiarizing employees with the Bank Secrecy Act (BSA), the USA PATRIOT Act, and Anti-Money Laundering (AML) laws, as well as the specific guidelines and requirements associated with these regulations.
Customer service	Deposit Operations is the frontline for customer service, and the department must be able to handle customer inquiries, complaints, and requests effectively. The department must have knowledgeable staff, efficient processes, and the ability to communicate clearly with customers.	Training and Knowledge Management: Provide comprehensive training programs for staff members to ensure they have the necessary knowledge and skills to handle customer inquiries, complaints, and requests effectively. Implement ongoing training and knowledge management processes to keep staff up to date with product and process changes. This control helps ensure that the department has knowledgeable staff who can provide accurate and relevant information to customers. Streamlined Processes and Automation: Evaluate and optimize existing processes to improve efficiency in handling customer inquiries, complaints, and requests. Implement automation tools and technologies where possible to streamline repetitive tasks and minimize manual errors. This control helps ensure that the department can efficiently handle customer interactions and provide timely resolutions.
Data management	Deposit Operations has to manage a vast amount of data, including customer information, transaction details, and account balances. The department must ensure the accuracy and integrity of this data, which is crucial for financial reporting and decision-making.	Access controls: The first line of defense is to limit access to the data to only authorized personnel. This can be achieved through role-based access control (RBAC), where users are given permissions based on their job responsibilities. Access controls should also include strong passwords and multi-factor authentication to prevent unauthorized access. Data backup and recovery: To ensure the integrity and availability of the data, it is essential to have a robust data backup and recovery plan. This should include regular backups, off-site storage, and testing of the recovery plan to ensure it is effective. In the event of a data breach or loss, having a reliable backup and recovery plan can help minimize the impact on the organization. Data quality controls: To maintain the accuracy of the data, it is important to have data quality controls in place. This includes data validation, verification, and reconciliation processes to ensure that the data is complete, accurate, and consistent. Data quality controls should be built into the systems and processes used by the department to ensure that data is accurate from the outset and that errors are detected and corrected quickly.
Fraud prevention	Deposit Operations must be vigilant in detecting and preventing fraud. The department must have robust fraud prevention measures in place, including the use of sophisticated fraud detection tools, employee training, and customer education.	Employee training: The most effective control to mitigate the risk of fraud is through employee training. Proper training ensures that employees are aware of the latest fraud trends and techniques, and understand how to detect and prevent fraudulent activities. This should include regular training sessions that cover best practices, such as how to verify customer identities, how to detect and prevent social engineering attacks, and how to use fraud detection tools effectively. Sophisticated fraud detection tools: Fraud detection tools can help to identify and prevent fraudulent activities before they cause damage. These tools can include software that monitors transaction patterns and identifies anomalies, as well as systems that track and flag suspicious activities, such as unusually large or frequent transactions. These tools can be especially effective when used in conjunction with employee training, as they can help employees to quickly identify potential fraud. Customer education: Educating customers about fraud prevention can also be an effective control, as it can help to prevent fraud before it occurs. This can include providing customers with information about how to protect their personal and financial information, as well as tips on how to avoid scams and phishing attacks. By educating customers about fraud prevention, they can become an active line of defense against fraud, helping to identify and report suspicious activities.
High transaction volumes	Deposit Operations is responsible for processing a large volume of transactions, which can be a daunting task. Handling a large volume of transactions requires efficient processes, skilled staff, and reliable technology to ensure timely and accurate processing.	Automation and Workflow Management: Implementing automated systems and workflow management tools can significantly enhance the efficiency of transaction processing. Automated processes can reduce manual errors, increase speed, and streamline the overall workflow. This control helps ensure timely and accurate processing while reducing the burden on staff. Skilled Workforce and Training: Investing in a skilled workforce is crucial for handling a large volume of transactions effectively. Hiring and training employees with relevant expertise in deposit operations can improve accuracy and efficiency.

Fraud and Risk Management: key risks and controls

Accountable for managing the operational risks of the bank, such as those connected to compliance, cybersecurity, and data privacy. monitoring and detecting fraudulent activities.

Risk	What can go wrong	Best-practice controls
Balancing security and customer experience	While it is essential to have strict security measures in place, banks also need to ensure that customers have a seamless experience. Striking a balance between security and customer experience can be a challenge.	Multi-factor Authentication (MFA): Implementing MFA as a security control is highly effective in mitigating risks while maintaining a seamless customer experience. MFA requires customers to provide multiple pieces of evidence to verify their identities, such as passwords, biometrics (e.g., fingerprints or facial recognition), or physical tokens. This additional layer of security significantly reduces the risk of unauthorized access to customer accounts while still allowing for a relatively frictionless user experience. User Behavior Analytics (UBA): UBA leverages advanced analytics and machine learning algorithms to monitor and analyze user behavior patterns. By establishing a baseline of normal behavior, UBA can detect and flag potentially suspicious activities or anomalies, such as unusual login locations or transaction patterns. This control allows banks to enhance security without creating unnecessary friction for legitimate customers, resulting in a seamless experience.
Employee training	Fraud and risk management systems are only effective when the employees who operate them understand how to use them. Ensuring that employees receive adequate training is essential to maintaining the integrity of the bank's fraud and risk management systems.	Robust Training Program: Implementing a comprehensive training program for employees is the most effective control to mitigate the risk. The program should cover the operation and functionalities of the fraud and risk management systems, as well as educate employees about various fraud schemes and risk management strategies. Regular and ongoing training sessions should be conducted to ensure employees stay updated and proficient in using the systems effectively. Access Controls and User Permissions: Implement strict access controls and user permissions within the fraud and risk management systems. Limit access to authorized personnel only, based on their roles and responsibilities.
Identifying genuine transactions	The operations department needs to be able to differentiate between genuine and fraudulent transactions accurately. They must have a clear understanding of the customer's transaction history, behavior, and patterns to identify potential fraudulent activities.	Segregation of duties: This control is critical in preventing fraud because it involves separating the key functions within the operations department, such as transaction approval, transaction processing, and record-keeping. By separating these functions, no single individual has the power to initiate, process, and record a transaction, thereby reducing the risk of fraudulent transactions. Implementing fraud detection tools: To identify potential fraudulent activities, organizations can implement various fraud detection tools such as transaction monitoring, anomaly detection, and predictive analytics. These tools can help identify unusual patterns or transactions that deviate from the customer's historical behavior, thereby enabling the operations department to investigate and take appropriate action. Regular employee training and awareness: It is essential to provide regular training and awareness to employees in the operations department to help them understand the importance of fraud prevention, how to identify potential fraudulent activities, and the organization's fraud prevention policies and procedures. Training can also provide guidance on how to respond to and report suspicious activities, reducing the likelihood of fraudulent transactions.
Keeping up with evolving fraud techniques	Fraudsters are constantly coming up with new ways to deceive banks and customers. As a result, the operations department needs to stay updated on the latest fraud techniques to detect and prevent fraud.	Robust Fraud Detection and Prevention Systems: Implementing advanced fraud detection and prevention systems is crucial to mitigate the risk of fraud. These systems should incorporate machine learning algorithms and data analytics to identify patterns and anomalies in transactions, accounts, and customer behavior. Regularly updating and fine-tuning these systems based on emerging fraud techniques and trends will help detect and prevent fraudulent activities effectively. Continuous Monitoring and Surveillance: Establishing a strong monitoring and surveillance framework is essential to stay ahead of evolving fraud techniques. This involves implementing real-time transaction monitoring tools and systems to detect suspicious activities promptly. Monitoring should extend to customer accounts, transactional data, and system logs, enabling proactive identification of potential fraud indicators.
Managing false positives	False positives occur when a legitimate transaction is flagged as fraudulent. Managing these false positives can be challenging as it can lead to customer dissatisfaction and can affect the bank's reputation.	Advanced Analytics and Machine Learning Models: Implementing sophisticated analytics and machine learning models can greatly enhance the accuracy of fraud detection systems. These models can continuously learn from historical data, adapt to evolving fraud patterns, and improve their ability to distinguish between genuine and fraudulent transactions. By minimizing false positives, customer dissatisfaction can be reduced, and the bank's reputation can be protected. Customized Rule-Based Systems: Developing customized rule-based systems allows banks to define specific rules and thresholds based on their unique business requirements and transaction patterns.
Technology limitations	While technology has made fraud detection and prevention easier, there are still limitations. Banks need to invest in the latest fraud detection and prevention technologies continually and ensure they are integrated into the bank's systems effectively.	Implement a robust risk management framework: The best way to mitigate the risk of fraud is by implementing a comprehensive risk management framework. The framework should cover all aspects of the bank's operations, including technology, processes, people, and governance. The risk management framework should be regularly reviewed, updated, and tested to ensure it remains effective. Use advanced fraud detection and prevention technologies: While technology has its limitations, the use of advanced fraud detection and prevention technologies is still one of the most effective ways to detect and prevent fraud. Banks should invest in the latest fraud detection and prevention technologies, such as artificial intelligence, machine learning, and biometrics. These technologies can help banks detect fraud in real-time and prevent it from happening in the first place. Train employees on fraud prevention and detection: No matter how advanced the technology is, the human factor is still critical in detecting and preventing fraud. Banks should invest in employee training programs to educate staff on fraud prevention and detection. This training should cover topics such as identifying red flags, reporting suspicious activities, and understanding the bank's policies and procedures for preventing fraud. With well-trained employees, banks can better detect and prevent fraud.

Loan Operations: key risks and controls

In charge of loan origination, documentation, servicing, collections, and accounting in addition to loan servicing.

Risk	What can go wrong	Best-practice controls
Handling high volumes of loan applications	Commercial banks typically receive a high volume of loan applications, which can put pressure on loan operations teams to process loans quickly and efficiently. This can be challenging, particularly during busy periods when there may be limited resources available.	Automation and Digitalization: Implementing automation and digitalization solutions can significantly improve the efficiency of loan processing operations. This includes using advanced software systems and artificial intelligence (AI) algorithms to automate repetitive tasks, streamline workflows, and reduce the manual effort required for loan processing. By automating various stages of the loan application process, banks can handle higher volumes of applications with existing resources and ensure faster turnaround times. Capacity Planning and Resource Allocation: Effective capacity planning involves forecasting loan application volumes during busy periods and allocating resources accordingly. Banks can analyze historical data, market trends, and other factors to estimate peak demand periods and adequately staff their loan operations teams. By aligning resources with anticipated workloads, banks can better manage the pressure during busy periods and ensure sufficient personnel to process loans efficiently.
Maintaining customer satisfaction	Loan operations teams are responsible for providing excellent customer service to borrowers, which can be challenging when dealing with complex loan applications or when there are delays in the loan processing timeline. Maintaining clear lines of communication with borrowers and providing regular updates can help to mitigate these challenges.	Standardized Communication Protocols: Implementing standardized communication protocols ensures that loan operations teams have clear guidelines and procedures for interacting with borrowers. This control helps maintain consistent and effective communication throughout the loan process, reducing the risk of miscommunication or delays. Automated Workflow Management Systems: Utilizing automated workflow management systems streamlines the loan processing timeline and reduces the chances of delays. These systems enable teams to track the progress of loan applications, assign tasks, and set reminders for regular updates, ensuring transparency and efficient processing.
Managing loan documentation	Loan operations professionals are responsible for verifying loan applications and ensuring that all the necessary documentation is complete and accurate. This can be a time-consuming and complex process, as loan applications can vary in complexity and may require different types of documentation depending on the type of loan.	Segregation of Duties: Divide loan operations professionals' roles and responsibilities so that no single individual has complete control over the loan verification and documentation process. By separating key functions like loan approval, documentation review, and data entry, you reduce the risk of errors, fraud, or malfeasance. This control helps to ensure that different people are responsible for different stages of the loan process and that no one person has complete control over the process. Automation: Implementing loan application processing software can automate much of the documentation verification and approval process, making it faster and more accurate. Automated software can detect discrepancies in loan applications and documentation, flagging them for review by loan operations professionals. Automation can also reduce the time needed to process loan applications and documentation, thereby lowering operational costs and reducing the risk of errors. Training and Education: Provide loan operations professionals with training and educational resources to ensure they understand how to verify loan applications and documentation accurately. Effective training should emphasize the importance of verifying information accurately and highlight the potential risks of not doing so. This control helps to ensure that loan operations professionals have the necessary knowledge and skills to identify potential issues and mitigate risks associated with the loan application process.
Managing risk	Loan operations professionals need to assess the risk associated with each loan application and ensure that the bank's lending policies and procedures are followed. This can involve identifying potential risks and taking steps to mitigate them, such as requiring additional collateral or adjusting the terms of the loan.	Comprehensive Risk Assessment: Performing a thorough risk assessment is crucial to identify potential risks associated with loan applications. This involves analyzing factors such as the applicant's creditworthiness, financial stability, collateral, and market conditions. By conducting a comprehensive risk assessment, loan operations professionals can make informed decisions and identify potential red flags early on. Robust Loan Approval Process: Implementing a well-defined and rigorous loan approval process is essential to mitigate risks effectively.
Meeting regulatory requirements	Commercial banks are subject to a range of regulations and compliance requirements, and loan operations professionals need to ensure that all loans are processed in accordance with these regulations. This can involve keeping up to date with changing regulations and ensuring that all loan documentation and processes are compliant.	Robust regulatory compliance training and ongoing education programs for loan operations professionals: By providing comprehensive training and education to loan operations professionals, commercial banks can ensure that they understand the latest regulatory requirements and are equipped with the knowledge and skills to comply with them. Strong internal controls and policies for loan processing: Commercial banks should establish and maintain robust internal controls and policies for loan processing operations that align with regulatory requirements. This can include standardizing loan documentation, establishing clear approval processes, and implementing risk-based compliance monitoring and reporting. Regular internal and external compliance audits: Regular internal and external compliance audits are essential for ensuring that loan processing operations at commercial banks are compliant with regulations. These audits should be conducted by independent auditors to ensure impartiality, and the results should be used to identify areas of improvement and develop action plans to address any compliance gaps.

Payment Operations: key risks and controls

In charge of managing the bank's connections with payment networks and clearinghouses and processing payments, including cheques, wire transfers, and ACH transactions.

Risk	What can go wrong	Best-practice controls
Complexity of Payment Operations	The Payment Operations team is responsible for handling a large volume of transactions every day. The complexity of these transactions can vary, depending on the type of payment, currency, and the country in which the transaction is being made. The team must ensure that all transactions are processed accurately and efficiently.	Automation and standardization of processes: Automating and standardizing processes can help reduce the risk of errors and improve the efficiency of the team. This can be achieved through the use of workflow management systems, robotic process automation (RPA), and other technologies. By implementing standardized procedures and automating routine tasks, the team can focus on handling exceptions and other complex transactions. Segregation of duties: Segregation of duties is a critical control that helps prevent errors and fraud by ensuring that no single person has complete control over a transaction from start to finish. Different team members could be assigned to handle different aspects of the transaction, such as initiation, authorization, and reconciliation. This can help ensure that all transactions are properly reviewed and approved before being processed. Training and supervision: Proper training and supervision of team members can help ensure that they have the necessary skills and knowledge to handle complex transactions accurately and efficiently. Regular training sessions can also help keep team members up-to-date with changes in regulations and industry best practices, which can further reduce the risk of errors. Supervision can provide oversight and guidance to ensure that processes are being followed correctly and that any issues are addressed promptly.
Compliance	Banks operate in a heavily regulated environment and are required to comply with a range of laws and regulations related to payments. Payment Operations teams must ensure that they comply with these regulations, which can vary from country to country.	Robust Compliance Monitoring Systems: Implementing a comprehensive compliance monitoring system is crucial to ensure adherence to regulations. This system should include regular audits, checks, and reviews to identify any non-compliance issues. It should also have built-in alerts and reporting mechanisms to promptly address and rectify any regulatory breaches. Clear Policies and Procedures: Establishing clear and well-documented policies and procedures is essential for payment operations teams. These should outline the specific regulatory requirements in different countries and provide guidance on how to comply with them.
Customer Service	Payment Operations teams must provide excellent customer service to their clients. This can involve responding to customer queries, resolving issues quickly, and ensuring that all transactions are processed smoothly.	Robust Training and Knowledge Management: Implement comprehensive training programs to equip Payment Operations teams with the necessary knowledge and skills to handle customer queries and resolve issues promptly. Regular training sessions should cover payment processing procedures, troubleshooting techniques, and effective communication strategies. Customer Relationship Management (CRM) System: Adopt a CRM system to track and manage customer interactions, inquiries, and complaints. This system should provide a centralized database for storing customer information and transaction histories, enabling the team to access relevant data quickly and provide personalized support.
Fraud Prevention	Payment fraud is a constant threat to banks. Payment Operations teams must have robust fraud prevention processes in place to detect and prevent fraudulent transactions.	Transaction Monitoring Systems: Implementing robust transaction monitoring systems is one of the most effective controls to detect and prevent fraudulent transactions. These systems use advanced algorithms and machine learning techniques to analyze transaction patterns, detect anomalies, and identify potential fraud in real-time. They can flag suspicious transactions for further investigation or automatically block them. Multi-factor Authentication (MFA): Implementing MFA is another effective control to mitigate payment fraud.
Technology	Banks are increasingly relying on technology to manage their payment operations. Payment Operations teams must keep up with the latest technology trends and ensure that their systems are secure and up-to-date.	Regular Security Assessments and Audits: Performing regular security assessments and audits is crucial to identify vulnerabilities in payment systems and ensure their security. This control involves conducting penetration testing, vulnerability scanning, and code reviews to identify potential weaknesses or gaps in the system. By addressing these issues promptly, the organization can enhance the security of their payment operations. Robust Authentication and Access Controls: Implementing strong authentication mechanisms and access controls is essential to prevent unauthorized access to payment systems and data.
Time Sensitivity	Payments are time-sensitive, and any delay can cause problems for the customer. Payment Operations teams must ensure that all transactions are processed quickly and accurately to avoid any delays.	Automation of Payment Processing: Automation of payment processing can help in reducing the risk of delays by eliminating manual processing errors and reducing processing times. The use of software and tools to automate payment processing can also ensure accuracy and consistency of payments, thus reducing the risk of delays. Regular Monitoring and Reporting: Regular monitoring of payment processing can help identify issues or delays in the process. This can be achieved through daily or periodic reconciliations and reports that help in identifying and resolving issues before they cause significant delays. Staff Training and Development: Payment Operations teams should be well-trained in processing payments accurately and quickly. Regular training sessions can help keep staff up-to-date with the latest technology and best practices, thus reducing the risk of delays in payment processing. Additionally, cross-training and development opportunities can ensure that backup personnel are available in case of staff absences or other disruptions.

Treasury Operations: key risks and controls

Accountable for managing the bank's liquidity and cash position, which includes maintaining the bank's ties with other financial institutions and investing surplus funds in short-term products.

Risk	What can go wrong	Best-practice controls
Liquidity Risk	Treasury Operations also has to manage the bank's liquidity risk. This involves ensuring that the bank has sufficient cash and liquid assets to meet its obligations as they fall due. Managing liquidity risk requires constant monitoring of the bank's funding sources, cash flows, and available liquid assets.	Cash Flow Forecasting: Creating and maintaining accurate and up-to-date cash flow projections help in identifying future cash shortfalls and surpluses. This can assist the Treasury Operations team in planning and managing the bank's liquidity position proactively. Diversification of Funding Sources: Relying on a single funding source can expose the bank to funding gaps during times of market volatility. Diversifying the bank's funding sources and establishing relationships with multiple lenders can help mitigate this risk. Establishing a Contingency Funding Plan: Developing a contingency funding plan that outlines the sources and availability of liquid assets during times of stress or unexpected disruptions can help mitigate liquidity risk. This plan should also include stress-testing scenarios to assess the bank's liquidity position under various adverse scenarios.
Market Risk	Treasury Operations is responsible for managing the bank's exposure to market risks, such as interest rate risk, foreign exchange risk, and credit risk. Managing market risks is a complex task that requires sophisticated models and careful analysis. Any miscalculation or oversight can lead to significant financial losses.	Robust Risk Management Policies and Procedures: Implementing comprehensive risk management policies and procedures is crucial to identify, assess, and mitigate market risks effectively. These policies should cover areas such as risk identification, risk measurement and monitoring, risk limits, risk reporting, and escalation procedures. Clear guidelines and protocols ensure that risks are properly understood and managed throughout the treasury operations. Independent Risk Oversight: Establishing an independent risk oversight function or committee can enhance risk management effectiveness. This oversight body should have the authority and expertise to monitor and evaluate the bank's exposure to market risks independently. They can provide valuable insights, challenge risk assumptions, review risk models, and ensure compliance with risk management policies. This independent oversight helps identify any potential miscalculations or oversights and enables timely corrective actions.
Operational Risk	Treasury Operations is also exposed to operational risks, such as human error, system failures, and fraud. Managing operational risks requires robust processes and controls, as well as ongoing training and education for staff.	Robust Process and Control Framework: Implementing a comprehensive framework of processes and controls is crucial for mitigating operational risks. This involves clearly defined procedures and protocols, segregation of duties, approval mechanisms, and regular reviews to ensure effectiveness and compliance. Ongoing Training and Education: Providing regular training and education for staff is essential to enhance their awareness of operational risks and equip them with the necessary skills and knowledge to handle their responsibilities effectively. This can include training on risk management, system usage, error identification and prevention, and fraud awareness.
Regulatory Compliance	Treasury Operations has to comply with various regulatory requirements, such as capital adequacy rules, liquidity ratios, and risk management guidelines. The regulatory environment is constantly changing, and complying with these requirements can be time-consuming and costly.	Regulatory Compliance Monitoring and Reporting System: Implementing a robust system to monitor and report on regulatory compliance is crucial. This system should include automated processes that track changes in regulations, assess the impact on the organization, and provide real-time updates on compliance status. It should also generate reports to demonstrate adherence to capital adequacy rules, liquidity ratios, and risk management guidelines. Dedicated Regulatory Compliance Team: Establishing a dedicated team responsible for monitoring and interpreting regulatory changes can help ensure timely compliance.
System and Process Integration	Treasury Operations is highly dependent on technology, and ensuring that systems and processes are integrated and working properly is critical. Any downtime or malfunction can disrupt operations and lead to financial losses.	Business Continuity Plan (BCP): A BCP is a comprehensive framework that outlines the steps and procedures to be taken in case of a disruptive event. A well-designed BCP will include contingency plans to ensure the continuity of critical operations, including Treasury Operations, in case of a system malfunction or downtime. A BCP should include regular testing to ensure that it is effective in minimizing disruptions to Treasury Operations. Redundancy: Redundancy refers to the duplication of critical systems and processes to minimize the risk of a single point of failure. Redundancy can include having multiple servers or data centers, as well as backup systems that can quickly take over in case of a failure. By having redundant systems in place, Treasury Operations can continue functioning even if one system experiences downtime or malfunctions. Monitoring and Reporting: Monitoring and reporting involve the regular tracking and analysis of systems and processes to identify any potential issues before they become disruptive. This can include real-time monitoring of system performance, as well as regular reviews of key metrics to identify trends and potential issues. By being proactive in identifying potential issues, Treasury Operations can take corrective actions before they cause disruptions or financial losses.

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Frequently asked questions

What are the key risks in Operations?

The main risk areas covered are Customer Service, Deposit Operations, Fraud and Risk Management, Loan Operations, Payment Operations, Treasury Operations. Each unit lists its key risks with a short explanation and the best-practice controls that mitigate them.

How do I use this register for a risk and control self-assessment?

Select the risks that apply to your units, map the listed controls to the controls you actually operate, rate inherent risk and control effectiveness, then agree actions for gaps. The free RCSA workbook on this page has the columns ready.

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