Advanced Operations Management

<p>Preface xvii</p>
<p>About the author xix</p>
<p>1 THE CHALLENGE 1</p>
<p>The profile of operations 2</p>
<p>Operations is a business 3</p>
<p>The challenge of change 5</p>
<p>The challenge of management style 7</p>
<p>The challenge of global markets 8</p>
<p>The challenge of personal goals 10</p>
<p>The challenge of dealing with events 10</p>
<p>2 THE MANAGEMENT PHILOSOPHY 13</p>
<p>Reporting lines 19</p>
<p>3 THE MANAGEMENT OF RISK 23</p>
<p>Market risk 26</p>
<p>Characteristics of the products used 27</p>
<p>Management risk 27</p>
<p>Inadequate procedures and controls 27</p>
<p>Information or reporting risk 28</p>
<p>Market or principal risk 28</p>
<p>Credit or counterparty risk 30</p>
<p>Operational risk 31</p>
<p>Means of reducing settlement risk 33</p>
<p>Personnel/HR risk 35</p>
<p>Liquidity risk 36</p>
<p>Systemic risk 37</p>
<p>Financial or treasury risk 38</p>
<p>Technology risk 39</p>
<p>Systems failures 39</p>
<p>Technology awareness 40</p>
<p>Legal risk 40</p>
<p>Regulatory risk 41</p>
<p>Reputation risk 42</p>
<p>Other risks 43</p>
<p>Malicious risk 43</p>
<p>Country risk 43</p>
<p>Understanding risk 45</p>
<p>Controlling risk 45</p>
<p>Strategic controls 46</p>
<p>Management responsibility 48</p>
<p>Role of risk management 49</p>
<p>The risk management process 50</p>
<p>Risk management departments 52</p>
<p>Staff training 55</p>
<p>4 SECURITIES FINANCING 57</p>
<p>What is securities financing? 58</p>
<p>Stock lending 59</p>
<p>Securities lending process flows 64</p>
<p>Loan initiation 65</p>
<p>Delivery of collateral and securities 65</p>
<p>Management of benefits and collateral 65</p>
<p>Return/recall of securities 66</p>
<p>Payment of fees 66</p>
<p>Lending agreement 67</p>
<p>Repurchase agreements (Repos) 67</p>
<p>Collateral 68</p>
<p>Securitisation 70</p>
<p>5 TREASURY AND FUNDING 71</p>
<p>Case study 75</p>
<p>Unsecured borrowing 80</p>
<p>Secured borrowing 81</p>
<p>Money market instruments 83</p>
<p>Derivatives 84</p>
<p>Foreign exchange 84</p>
<p>Treasury settlements 85</p>
<p>Cash management 86</p>
<p>Risk in treasury settlement 88</p>
<p>6 RESOURCE MANAGEMENT 91</p>
<p>Pressures on resource 92</p>
<p>Defining resource 96</p>
<p>Training and developing people 97</p>
<p>Contingency planning 98</p>
<p>Restructuring 101</p>
<p>Training and personal development 103</p>
<p>Succession planning 105</p>
<p>Dealing with people 107</p>
<p>The working environment 110</p>
<p>Managing systems 110</p>
<p>Technical performance 113</p>
<p>Operational performance 114</p>
<p>Difficult people 115</p>
<p>Motivation 117</p>
<p>No motivation means trouble is brewing 120</p>
<p>Performance measurement 120</p>
<p>Management of people 122</p>
<p>7 TECHNOLOGY IN OPERATIONS 127</p>
<p>Timing and resourcing 135</p>
<p>Loss of key personnel 137</p>
<p>Managing the operations function through the project 137</p>
<p>Post–implementation 141</p>
<p>Technology and the future 141</p>
<p>8 PROCEDURAL DOCUMENTATION CAPTURING THE KNOWLEDGE BASE 143</p>
<p>The historical perspective 144</p>
<p>The benefits of good documentation 145</p>
<p>What is good procedural documentation? 148</p>
<p>In–house or outsource? 150</p>
<p>1 Skill 150</p>
<p>2 Time 151</p>
<p>3 Cost 152</p>
<p>Maintaining, controlling and distributing the documentation 152</p>
<p>9 CLIENT MANAGEMENT 155</p>
<p>Customer relationships 157</p>
<p>The approach to customer relationships and the client culture 160</p>
<p>Know your client 164</p>
<p>General guide to account opening and customer identification 164</p>
<p>Money laundering 178</p>
<p>Defining the service and establishing relationships 178</p>
<p>What is considered as client service? 178</p>
<p>Establishing relationships 179</p>
<p>The manager s role in relationship management 180</p>
<p>Structure of the operations function 182</p>
<p>Responsibility 182</p>
<p>Measuring service levels 184</p>
<p>Escalation procedures 186</p>
<p>Client liaison programmes 187</p>
<p>Front–office client team 188</p>
<p>Industry issues 188</p>
<p>Training the team 189</p>
<p>Analysing competition 189</p>
<p>Developing the service 190</p>
<p>What are the potential problems in customer relationships? 191</p>
<p>Managing risk in the customer relationship 192</p>
<p>Client visits 194</p>
<p>10 MANAGEMENT INFORMATION 197</p>
<p>Information paths 200</p>
<p>Distribution 201</p>
<p>MI production 202</p>
<p>Sourcing data 203</p>
<p>Compilation and validation 204</p>
<p>Production of MI 204</p>
<p>Risks in MI 207</p>
<p>11 OUTSOURCING/INSOURCING OPERATIONS FUNCTIONS 211</p>
<p>Outsourcing 212</p>
<p>Regulation and outsourcing 214</p>
<p>Insourcing 223</p>
<p>12 INDUSTRY DEVELOPMENTS 225</p>
<p>Regulatory changes and T&amp;C 231</p>
<p>Industry recommendation 232</p>
<p>Shortening settlement cycles 232</p>
<p>What else? 233</p>
<p>Bank for International Settlement 233</p>
<p>Securities Industry Association 234</p>
<p>Alternative Investment Management Association 235</p>
<p>International Swaps and Derivatives Association 235</p>
<p>International Securities Markets Association 236</p>
<p>GSCS benchmarks 237</p>
<p>Other industry organisations 237</p>
<p>Remote clearing 237</p>
<p>The G30 s 20 recommendations 239</p>
<p>Creating a strengthened, interoperable global network 239</p>
<p>Mitigating risk 240</p>
<p>Improving governance 241</p>
<p>Appendices</p>
<p>A FATF DOCUMENTS ON THE FORTY RECOMMENDATIONS 243</p>
<p>B FATF GAFI 279</p>
<p>C CONSOLIDATED KYC RISK MANAGEMENT 283</p>
<p>Glossary 297</p>
<p>List of abbreviations 311</p>
<p>Useful websites and suggested further reading 313</p>
<p>Index 315</p>