Exercise 1: Operational Risk Identification Prompt Engineering
Objective:
Learn to craft effective prompts for comprehensive operational risk identification across business processes.
Background:
Operational Risk Officers are responsible for identifying risks in business processes, systems, and external events. A key challenge is developing a comprehensive view of operational risks across the organization.
Exercise:
1. Scenario:
You need to conduct a comprehensive operational risk assessment for a new digital payment processing system being implemented at your financial institution.
2. Basic Prompt Example:
What are the operational risks of implementing a new payment system?3. Prompt Improvement Activity:
- Identify the limitations of the basic prompt
- Add specific details about the payment system
- Include context about your organization's operational risk framework
- Request structured analysis across operational risk categories
- Ask for risk scenarios and potential impacts
4. Advanced Prompt Template:
I am an Operational Risk Officer at a [size] financial institution conducting a comprehensive operational risk assessment for a new digital payment processing system with these characteristics:
System details:
- Payment types supported: [ACH, wire, P2P, bill pay, etc.]
- Processing volume: approximately [X] transactions daily
- Integration points: [core banking, mobile app, third-party services]
- Implementation approach: [phased rollout, full replacement]
- Vendor components: [list any third-party elements]
- Technology stack: [cloud-based, on-premises, hybrid]
Operational risk framework:
- Risk categories: [people, process, systems, external events]
- Risk assessment methodology: [qualitative, quantitative, hybrid]
- Control categories: [preventive, detective, corrective]
- Risk appetite: [relevant statements or thresholds]
- Key operational risk indicators currently monitored
Please help me develop a comprehensive operational risk assessment by:
1. Identifying specific operational risks across these categories:
- Process risks (workflow design, handoffs, approvals, etc.)
- People risks (training, staffing, expertise, etc.)
- Systems risks (availability, performance, security, etc.)
- External event risks (vendor, regulatory, fraud, etc.)
- Change management risks (implementation, testing, transition)
2. For each identified risk:
- Provide a clear risk statement
- Develop 2-3 specific risk scenarios that could occur
- Assess potential impacts (financial, customer, regulatory, reputational)
- Identify key risk drivers and contributing factors
- Suggest potential key risk indicators to monitor
3. Recommend a methodology for:
- Prioritizing these risks based on impact and likelihood
- Assessing inherent vs. residual risk
- Identifying control requirements
- Determining testing and monitoring approaches
- Establishing risk acceptance criteria
4. Suggest a structured approach for:
- Documenting these risks in our operational risk management system
- Reporting to senior management and risk committees
- Ongoing monitoring and reassessment
- Integration with business continuity planning
Format your response as a structured operational risk assessment framework that I can use to conduct a thorough analysis of our new payment processing system.5. Evaluation Criteria:
- Does the prompt clearly describe the payment system and its components?
- Does it provide context about the operational risk framework?
- Does it request specific risks across multiple categories?
- Does it ask for risk scenarios and potential impacts?
- Does it request methodologies for prioritization and documentation?
6. Practice Activity:
Create your own advanced prompt for operational risk identification related to:
- A new loan origination process
- A branch consolidation initiative
- A core banking system upgrade
Exercise 2: Control Assessment Prompt Engineering
Objective:
Develop skills to craft prompts that help assess the design and effectiveness of operational controls.
Background:
Operational Risk Officers must evaluate controls that mitigate identified risks. A key challenge is designing comprehensive control assessments that identify weaknesses before they lead to incidents.
Exercise:
1. Scenario:
You need to assess the design and operating effectiveness of controls for your institution's wire transfer process.
2. Basic Prompt Example:
What controls should we have for wire transfers?3. Prompt Improvement Activity:
- Identify the limitations of the basic prompt
- Add specific details about the wire transfer process
- Include context about control objectives and standards
- Request a structured control assessment methodology
- Ask for testing approaches and effectiveness criteria
4. Advanced Prompt Template:
I am an Operational Risk Officer at a [size] financial institution conducting a comprehensive control assessment for our wire transfer process with these characteristics:
Process details:
- Volume: approximately [X] wires processed daily
- Types: domestic and international wires
- Channels: branch, online banking, phone requests
- Average value: [$ amount] per transaction
- High-risk scenarios: high-value wires, international destinations, new beneficiaries
- Recent incidents: [describe any recent issues or near-misses]
- Technology: [systems used for wire processing]
Control framework:
- Control objectives: accuracy, authorization, fraud prevention, regulatory compliance
- Control types: preventive, detective, corrective
- Control standards: [relevant internal or external standards]
- Control ownership: [business line vs. centralized functions]
- Testing frequency: [current assessment cycle]
- Regulatory requirements: [relevant regulations for wire transfers]
Please help me develop a comprehensive control assessment by:
1. Identifying key control points throughout the wire transfer process:
- Initiation and request validation
- Customer authentication and authorization
- Beneficiary verification and validation
- Transaction approval and release
- Settlement and reconciliation
- Exception handling and investigations
- Monitoring and reporting
2. For each control point, recommend:
- Specific control objectives
- Key preventive controls
- Key detective controls
- Segregation of duties requirements
- System access and authorization controls
- Documentation and evidence requirements
3. For each recommended control:
- Provide a clear control statement
- Explain the risk(s) it addresses
- Describe design effectiveness criteria
- Outline operating effectiveness testing approach
- Identify potential control weaknesses or failure points
- Suggest control enhancement opportunities
4. Recommend a methodology for:
- Assessing control design effectiveness
- Testing operating effectiveness
- Evaluating control interdependencies
- Identifying control gaps
- Determining appropriate remediation timeframes
- Establishing ongoing monitoring mechanisms
Format your response as a structured control assessment framework that I can use to thoroughly evaluate our wire transfer process controls.5. Evaluation Criteria:
- Does the prompt clearly describe the wire transfer process?
- Does it provide context about control objectives and standards?
- Does it request specific controls for each process point?
- Does it ask for design and operating effectiveness criteria?
- Does it request a methodology for assessment and remediation?
6. Practice Activity:
Create your own advanced prompt for control assessment related to:
- Customer onboarding and KYC process
- IT change management process
- Third-party vendor management process
Exercise 3: Operational Risk Reporting Prompt Engineering
Objective:
Learn to craft prompts that help develop effective operational risk reports for different stakeholders.
Background:
Operational Risk Officers must communicate risk information to various stakeholders. A key challenge is creating clear, actionable risk reports that drive appropriate responses.
Exercise:
1. Scenario:
You need to develop operational risk reports for the board risk committee, senior management, and business line leaders.
2. Basic Prompt Example:
What should be included in an operational risk report?3. Prompt Improvement Activity:
- Identify the limitations of the basic prompt
- Add specific details about the reporting objectives
- Include context about different stakeholder needs
- Request structured reporting frameworks for each audience
- Ask for visualization and presentation recommendations
4. Advanced Prompt Template:
I am an Operational Risk Officer at a [size] financial institution developing comprehensive operational risk reporting for multiple stakeholders.
Reporting context:
- Current operational risk profile: [high-level description]
- Key operational risk concerns: [top risks or recent developments]
- Significant incidents: [recent losses or near-misses]
- Regulatory focus areas: [examiner concerns or industry trends]
- Available data: [risk assessments, KRIs, loss data, control testing]
- Reporting frequency: [monthly, quarterly]
Stakeholder profiles:
1. Board Risk Committee:
- Composition: [number of members, backgrounds]
- Risk expertise: [sophisticated, limited]
- Information needs: [strategic oversight, governance]
- Time constraints: [meeting frequency, duration]
- Current concerns: [specific areas of focus]
2. Executive Management:
- Composition: [CEO, business line executives, etc.]
- Focus areas: [strategic, financial, operational]
- Decision-making needs: [resource allocation, prioritization]
- Preferred format: [dashboard, detailed analysis]
- Action orientation: [directive, consultative]
3. Business Line Leaders:
- Operational responsibilities: [front line, support functions]
- Risk management maturity: [advanced, developing]
- Accountability framework: [performance metrics, incentives]
- Information needs: [tactical, actionable]
- Response capabilities: [resource constraints, expertise]
Please help me develop comprehensive operational risk reporting by:
1. For the Board Risk Committee, design a reporting framework that includes:
- Executive summary approach
- Key components and metrics
- Strategic risk themes and trends
- Governance and oversight elements
- Appropriate level of detail and aggregation
- Visual presentation recommendations
2. For Executive Management, design a reporting framework that includes:
- Dashboard components and layout
- Key performance vs. risk indicators
- Resource allocation decision support
- Accountability mechanisms
- Action tracking and follow-up
- Escalation criteria and processes
3. For Business Line Leaders, design a reporting framework that includes:
- Operational performance linkage
- Actionable risk insights
- Control effectiveness metrics
- Peer comparison approaches
- Improvement opportunity identification
- Implementation support elements
4. For each reporting framework, recommend:
- Effective data visualization techniques
- Narrative development approaches
- Frequency and timing considerations
- Interactive elements and drill-down capabilities
- Supporting materials and appendices
- Continuous improvement mechanisms
Format your response as structured operational risk reporting frameworks for each stakeholder group that balance comprehensiveness with clarity and actionability.5. Evaluation Criteria:
- Does the prompt clearly describe the reporting context and available data?
- Does it provide detailed profiles of different stakeholders?
- Does it request specific reporting frameworks for each audience?
- Does it ask for visualization and presentation recommendations?
- Does it consider continuous improvement mechanisms?
6. Practice Activity:
Create your own advanced prompt for operational risk reporting related to:
- A significant operational incident post-mortem
- A new emerging risk category
- A regulatory examination preparation