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Gulf banks' get new weapon to deal with operational risk

ABS and Fransin of HSBC have joined forces to create a software package which will help Gulf banks better cope with one of its most serious problems.

Frasin Operational Risk, a division of HSBC Insurance Brokers, and Advanced Business Systems (ABS), have formed an alliance to protect banks and financial institutions in the Middle East against operational risk.

Under the agreement, ABS will market and deliver SOFWIN, Frasin’s operational risk management solution, throughout the Middle East.

Operational risk is a serious problem in banks worldwide, and has become such an important feature of risk management as a whole. The most important types of operational risk involve breakdowns in internal controls and corporate governance, which can lead to financial losses through error or fraud.

For example, a bank’s dealers, lending officers or other staff exceeding their authority or conducting business in an unethical or risky manner. The Fransin solution will concentrate on an equally serious aspect of operational risk— that of the failure of IT systems.

“Current indicators suggest that the Basle Committee on Banking Supervision will introduce capital adequacy charges for operational risk by the end of 2001,” said, Keith Blankey, General Manager, ABS. “Now is the ideal time for banks in the Middle East to assess their current operational risk strategy to ensure that controls are consolidated or maximised where appropriate.”

The solution allows financial institutions to identify, quantify and manage operational risk exposure. This Windows-based application, featuring advanced reporting and risk analysis tools, allows internal audit, authorisation and security controls data to be systematically collected and consolidated.

“We aim to establish SOFWIN as the first-choice operational risk management solution for the Middle Eastern banking community,” said Philip Martin, Managing Director, Frasin Operational Risk. “Middle Eastern banks will have access to software that can greatly improve the control of operational risks at a time when it is most needed.”

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