Operational risk is identified in the Basel II proposals as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. 78% of lenders went on to say that properly managed outsourcing could help reduce their level of operational risk.
The survey also questioned lenders on more general elements of mortgage regulation. 56% of respondents said ‘increases in processing efficiency’ will be the most important business objective needed to survive in a regulated market. ‘Increased use of technology’ was given as the business strategy most likely to help achieve this objectives according to 42% of respondents, followed by ‘straight through processing’ and ‘quality control programmes’ with 21% of votes each.
Adrian Guttridge, chief executive of MSMS, comments:
“High profile accountancy scandals in conjunction with the proposals contained in Basel II and the EU Credit Directive are increasing the awareness of operational risk. As the mortgage market moves towards statutory regulation operational risk is something that lenders need to be considering. Outsourcing providers can play a key part in their clients’ operational risk strategies.”
