Alan Lawman, Consultant, TCS Financial Solutions

Risk has always been an underlying part of Asset Servicing, and while it has declined over time through:

  • Messaging standardization
  • User/Client interfaces for direct entry
  • Improvements to Straight Through Processing (STP)
  • Reduction of human/user touch Risk still remains

Indeed, some would argue that its very existence is as a result of the above-mentioned improvements. The feeling being that improved automation, the impact of reducing costs, the increase in outsourcing and offshoring have all resulted in a less experienced work force which, in turn, has led to a perceived lack of control and management oversight.

The historic approach followed has been that the manager or the supervisor who was part of the Processing Team, and an ex-team member with great experience and knowledge, would still “chip in” when required to help out with processing.

Further, the processing was by an individual user, who owned the event, who touched everything during the event lifecycle, who checked every process, who ticked back a reconciliation and who completed a check list when the completed file was signed off closed.

So, when you consider the processing changes of the past 25 years, the automation, the Straight Through Processing and the management by exceptions, and off set that by the increasing complexity of events, the inability to bypass or break rules, and the loss of operational experience and awareness. You have to wonder if while the processing may now be considered better, it’s fair to ask if it is any less risky.

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