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A Campion Willcocks Associate supported a group-wide programme at Lloyds TSB focused on improving operational risk management to reduce costs, achieve regulatory compliance and deliver competitive advantage.
The challenges of change
“This programme was driven by various factors,” says Martin Turner, Group Compliance & Operational Risk Director, Lloyds TSB. “We wanted to improve management of operational risk across the group, taking in businesses such as Scottish Widows and the Cheltenham & Gloucester, and embed a greater understanding of operational risk within senior management.
“In addition to calculating capital for internal purposes there is, of course, a need for external purposes – regulatory capital . With the transition f rom Basel 1 to Basel 2, work has progressed across all risk types, with banks seeking to agree internal methodologies for the calculation of regulatory capital with the Financial Services Authority (FSA). A leading bank like Lloyds TSB wants to go for the advanced rather than standard approaches – not only to gain a competitive advantage and capital benefit but also to gain recognition from external commentators for our risk management expertise.”
Why Campion Willcocks
A short time scale and the need for specialist expertise led Martin to seek external resource to develop internal risk processes and enable Lloyds TSB to put together a strong application covering its Advanced Measurement Approach (AMA) for operational risk. “This is an opportunity to bring in an external perspective, to learn from what’s been done at other organisations,” he says. “It’s that experience you’re buying in. I wanted the right resource on the programme. It was difficult to resource from within the group given short timescales, and I reasoned that we would have far more flexibility using external resources .
“I’ve worked with Campion Willcocks for over a decade, so they’re automatically on my list when a requirement like this comes up. My approach was to say, ‘we’re running this programme, we need resource, who’s available and, crucially, do they combine programme skills with operational risk expertise?’ Adrian Thompson brought both.”
The right match
“Adrian had extensive content knowledge in this area,” continues Martin. “He could quickly interpret information put before him, rather than only having change management and programme skills. This meant he could add more value. He was a key part of the team.”
Benefits gained
“Adrian made a big contribution to our application being submitted on time . He helped us move faster than would otherwise have been possible. We’re already seeing benefits. Senior managers have a greater understanding of operational risk management, and can be more confident in identifying potential risks and dealing with them. This forward-looking aspect is now a key part of the framework. People can think about what could go wrong, to understand key risk events that might happen. They can then decide if they are happy to accept that risk, or if they need to deal with it. This is a change in mindset.
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