ABN Amro Readies to go Live with Raft's Operational Risk Solution

ABN Amro has implemented Raft International's Raft Radar, a Web-based operational risk platform. The global implementation began in January and is set to go live by the end of May. ABN Amro has installed a Web server in one location and single, central database, which can then be accessed through a log in by employees around the world.

Raft Radar enables users to map their organizational structure and authorization mechanisms against potential risks in business processes, which could lead to operational exposures. "The system maintains an organizational structure to allow incidents to be reported anywhere in the world, which then pass through an region-specific authorization sequence," says John Winter, product director at Raft and co-project manager of the ABN Amro implementation. "Then when you get to the top of the region-specific sequence it will come into the global sequence, so it's a combination of local and global coverage."

ABN Amro's operational-risk management group assesses the firm's risks and assigns risk scores to the risks they designate to be "control gaps," or potential operational exposures. "When a new risk event occurs, that risk event is allocated either into an existed control gap or into a new control gap and picks up a score," explains Winter.

In other words, an operational risk analyst within ABN Amro identify the potential areas of weakness, or operational risk, and the likelihood of that risk occurring and the possible impact on the business if that risk were to occur. The risk score is then assigned based on those factors. Risk incident information is then passed within an end-user firm through e-mail.

While Raft Radar was initially developed with Dresdner Kleinwort Wasserstein on BEA's WebLogic platform, ABN Amro's internal preference called for a migration onto the IBM WebSphere platform. "There was a bit of trauma with the switch of platforms to WebSphere because our developers were not particularly familiar with the tools, but now we're very productive on both platform," says Winter.

The Raft Radar solution is also Basel II compliant and enables end-user firms to maintain loss event records and data for specified periods, adds Winter. Users can run reports and look at trend analysis of operational risk information. Calculation engines are also embedded within the application for analysis of trading and settlement losing covering equity, debt, interest rate, cash, commodity and currency products.