OpRisk Scenario Analysis, Operational Risk Scenario Analysis
Structure Scenario Analysis (SSA) is a best of breed web-based software for the management of operational risk using operational risk scenario analysis evaluation, modelling, quantification, economic capital calculation and mitigation. The modelling and quantification are designed to translate risk metrics into economic value metrics such as capital requirements, cost of risk and NPV of mitigation investments. This design permits to boost the buy-in from senior and upper management on the operational risk management program and maximises the influence of the operational risk function over the organization.
Structured Scenario Analysis is used by multiple leading international institutions (banks and insurance companies) in the determination of capital requirements for Basel`s Pillar 2 and ICAAP and Internal Models and ORSA under Solvency II. It has received 5 awards by Risk.Net and InsuranceERM including Best Scenario Software of the Year (2018 and 2019), Best Stress Scenario Software and Best Operational Risk Solution (contact The Analytics Boutique for a demo and commercial details).
In addition, our methods have been widely published and our publications recognised by top practitioners (see Actuary Magazine and RiskBook).
The benefits of Structured Scenario Analysis are as follows:
- Boost the quality and robustness of operational risk scenario evaluations through different features for mitigating cognitive biases, sensitivity analysis in operational risk scenario answers and correlations, full traceability of results and more.
- Maximize the efficiency of the operational risk scenario analysis process by eliminating manual processes and low value-added tasks: email invitations, automatic generation of reports, reminder sending, notifications, answering progress module, chatting facility, operational risk scenario cloning, entire evaluation period cloning, bulk actions (multiple scenario creations, approvals, reverse approvals, deletions and other) and more.
- Robust governance with workflow, segregated functions, exhaustive audit trail, automatic documentation of modelling assumptions and more.
- Operational risk scenario mitigation using economic value metrics: NPV of mitigation plans and optimization of insurance programs.
- Amplifies the influence of the operational risk management function in senior and upper management by using economic value metrics of operational risk scenario impact and its mitigation.
- End-to-end operational risk scenario analysis process: scenario planning, scenario documentation, scenario evaluation, scenario mitigation and insurance optimization, scenario correlation, Monte Carlo simulation, sensitivity analysis, scenario multi-step aggregation and capital calculation.
Operational risk scenario documentation and evaluation
Operational risk scenario evaluation is also user defined and can take as many points in the distribution curve as needed (i.e., worst loss in 7 years, worst possible loss, typical loss or any other). Multiple experts can answer the same operational risk scenario evaluation and their answers will be automatically aggregated into a consolidated asnwer based on each expert precision for a more robust answer. 
Operational risk scenarios sensitivity analysis
SSA automatically performs the sensitivity shocks on operational risk scenario evaluations and aggregation correlations and provides the results of the shocks into the capital automatically.
Operational risk scenario mitigation
The mitigation plan Net Present Value (NPV) can be calculated in order to build the business case for justifying implementation and required investments. The differences in the risk profile of before and after mitigation together with the implementation cost of the control permits to determine whether the action plan add or not net present value to the institution.
Operational risk scenario insurance optimization
The insurance optimization permits to evaluate the actual protection offered by the insurer and the means to negotiate changes in the policy conditions and coverages.
Advanced operational risk scenario modelling and bayesian networks
For more detailed modelling, SSA also permits to model operational risk scenarios using Bayesian networks and their simulation output be integrated with the rest of the standard scenarios. SSA also permits to determine the mitigation plan NPV as in the normal modelling.
Operational risk scenario correlations and Monte Carlo simulation
Correlations and scenarios and then fed into a Monte Carlo simulation for determining capital requirements and generating economic value add metrics to manage operational risks.
Operational risk scenario aggregation and capital determination
