RiskTech Forum

Operational Risk Information Sensors for Unstructured Data

Posted: 1 November 2014

Banks and financial institutions use social media extensively and therefore need complex risk detection tools to monitor and understand the various operational risks. Sophisticated tools are required, in particular for identification of security risks such as non-compliance with operating procedures, that are inherent and escape easy detection. Social media can, however, also be leveraged to develop rare and high impact scenarios, build on risk repositories and add to loss data repositories to help strengthen the operational risk management capability.

Detection of operational risk in unstructured data forms would require complex algorithms and high performance data processing capabilities to derive meaning from voluminous unstructured data. Fortunately, advances in complex event processing techniques using sophisticated rules and statistical model driven algorithms has imparted considerable reliability to such detection engines. Further, a big jump in data crunching capability enabled by Big Data analytics has made it possible to conceive ‘in time’ or even ‘real time’ operational risk information sensors.

This whitepaper analyzes the issue of operational risk in unstructured data, more specifically social media, and proposes a comprehensive solution for detecting, processing and managing the operational risk information embedded there in.


The growth and ubiquity of modern communication technologies like emails, social media networks, telephone calls and messaging services have created opportunities as well as challenges. Banking and financial services organizations have been using these communication tools for operational and business purposes such as customer interaction, marketing, customer service, promotions and public relations as well as for customer acquisition and loyalty programs.

Many organizations use internal social networks such as online discussion forums for internal communication. This helps speed up processes through increased employee collaboration that boosts productivity and improves corporate culture. However, not many institutions are fully prepared to manage the potential operational risks associated with these highly evolved communication tools in use.

The Federal Financial Institutions Examination Council (FFIEC) issued elaborate guidelines for managing risks, specifically covering operational risk. The FFIEC guidance states that a risk management program in a financial institution should be able to identify, measure, monitor, and control the risks related to social media taking into account the breadth of its social presence1.

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