OPERA^® Basel II — Wealth Management Capital Allocation Case Study

Implementation
In just over six month's elapsed time, the wealth management group was able to implement a structured Basel II analysis and reporting framework to track the capital allocation requirements for non-bank activities.

BPG was able to help the bank efficiently complete its analysis of the Basel II business requirements and the impacts on the wealth management group systems.

The bank has also found that the process of tracking and trending data allows continuous improvement and benchmarking against the ultimate goal of zero errors and minimal processing risk. The bank shares this data not only internally, but also externally with custodians and fund accounting organizations further improving communications and processing efficiency.

Working with BPG over the three evolving stages of this project, the bank's executive management group and its staff vastly expanded their understanding of the complexity of assessing the effects of Basel II on managing their overall operations. Management and staff developed a greater knowledge of key operational process risks and they learned how to better manage these risks to minimize capital requirements, while improving overall operations performance.

BPG utilized its proprietary OPERA^® operations performance and risk measurement methodology to quantify operations quality and risk, showing how small cluster of errors might be warning signs of greater process risk.

The bank's risk management team was interested in understanding how consolidated metrics derived using the OPERA^® measurement approach could be unbundled to identify individual process quality or risk "hotspots", particularly where they might affect the quality of the investment management decisions.

Impact
Basis Point Group's unique 'Bank/Banc' risk analysis approach allowed the team to understand and quantify the impact on non-traditional service activities on the bank's capital structure. BPG's experience combined with this unique capital analysis framework enabled the bank to simplify a complex analysis and measurement process and clearly quantify each activity's impact on operating capital.

Basis Point Group's OPERA^® measurement framework allowed the team to better understand their operations and derive additional quality information from data they had been using in their day-to-day activities. By structuring this information differently, the team was able to gain insights and knowledge about risk activities and implement operating improvement.