OPERA^® Invest — Operations Improvement and Risk Reduction Case Study

Continuous Measurement
During the diagnostic effort, the team met weekly with members of the executive management to brief them on analytic progress. These meetings highlighted;

1. Analytic progress results from the measurement and information consolidation process and opportunities for refinements.
2. Evolving understanding of processing impediments that allowed risk to pool at certain points in the operational process at different times of the month.
3. Action plans to reduce immediate, clearly understood risks.
4. Areas where external factors where impeding operational processes or causing non-value-added work to migrate into the firm.
5. Limitations of the static analysis and potential future value from continuous measurement.

Based on the knowledge the team was able to obtain from a single monthly snapshot of internally available data, the Executive Management Committee asked the Basis Point Group to structure and manage the implementation of a continuous quality and process monitoring capability.

Working with the internal applications and development management and staff, BPG helped design a flexible analytic, measurement and trend reporting database to track proprietary operations performance and risk indexes.

Conclusion
In just over six months elapsed time, the firm was equipped to assure its internal processes were functioning properly at an acceptable level of risk. Further the firm was positioned to recognize and react to potential internal errors or those introduced by external parties. The reconciliation process had been replaced with a continuous verification process to assure internal quality and continuously monitor risk. This allowed the firm to redeploy 9 of the 12 people employed in this area to higher value operational needs and increase the responsibilities of those that remained.

All levels of the organization now have access to the same quality and risk data, summarizing or disaggregating it to the level appropriate to each individual's oversight, analysis or management role.

The firm 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 firm shares this data not only internally, but also externally with custodians and fund accounting organizations further improving communications and processing efficiency.

BPG was able to counsel the firm during the project about how its quality levels and risk factors seemed to typically compare to the industry as a whole.

Working with BPG over the three evolutionary projects, the firmÕs executive management group and its staff vastly expanded their understanding of the complexity of managing their overall operations efficiently and effectively. Management and staff developed a greater knowledge of key operational process risks that were threatening their profitability and institutional reputation. Finally, they learned how to better manage these risks, while improving operations performance.