Bui Nhu Y, Deputy CEO of VietinBank with experts.

This is the second conference on operational risk management hosted by VietinBank in the past two years. As the pioneer in operational risk management in Vietnam, VietinBank has been making great efforts to update best international practices in the banking industry to implement them effectively in Vietnam.

This year, the conference addressed three topics: operational risk appetite and the three lines of defense, lost data collection and sources of record loss, fraud management and customer profiles. The event attracted great interest from the authorities, domestic and foreign experts and other commercial banks. 

“With the presence of experienced and prominent speakers from VietinBank, HSBC, CMA Australia, Deloitte and other well-known industry players at this conference, VietinBank hopes that it will be a truly meaningful professional forum for participants to share experience and have in-depth discussions on issues related to operational risks, thereby making valuable recommendations for the future development of the banking sector,” said Ms. Bui Nhu Y, Deputy CEO of VietinBank.

Capacity building and institutional development

Ms. Nguyen Thu Hang, Operational Risk Director of VietinBank, gives a presentation.

The local and international banking sector has recently suffered from financial fraud and scams, as well as ATM skimming and fake credit card incidents. In addition, the growing popularity of online financial services, which has led to declining use of cash and fading physical barrier, is also another trend that can increase operational risk if the authorities and commercial banks do not take preventive or remedial actions. 

Mr. Kevin Green, Chief Risk Officer of HSBC Vietnam, said that the current types of operational risks in Vietnam included external fraud (such as fraudulent cash withdrawals/payments, trade finance facilities, etc.), internal fraud, information security risk and legal risk. These are all major challenges to banks. 

In order to manage risks, according to Green, an effective solution would be strict implementation of an operational risk management cycle, including the following four steps: identification and assessment, monitoring, mitigation/management, and reporting. 

One of the most important yet complicated aspects of risk management is reporting losses and identifying sources to record losses. This is also a matter of special interest for VietinBank in the recent period. 

At the conference, Ms. Nguyen Thu Hang, VietinBank’s Operational Risk Director, delivered a presentation entitled “Operational risk provision -International practice and recommendations for application at Vietnam commercial banks”. 

Hang recommended that credit institutions should be allowed to proactively use appropriate resources instead of financial reserves only, as prescribed by current practice, to cover operational losses since it is quite lengthy and difficult to tap the financial reserves. 

She also suggested the Ministry of Finance and the State Bank of Vietnam (SBV) allow credit institutions to set provisions for objective, uncontrollable and unmanageable operational risks whose sizes and frequencies can be reliably estimated. 

Mr. Le Thanh Ha, Vice Director of VietinBank's Card Center, stated that in order to ensure the sustainable development of the card market, it should be both critical and urgent to have regulations and guidance on establishing and using non-credit provisions in general and card-related non-credit provision in particular. 

During the session on “Fraud management and customer profile”, experts from Deloitte and Krungsri Bank of Thailand presented the new trends in fraud management. They also elaborated on key solutions to help banks improve their ability to respond to financial crimes. 

In addition, there were several open discussion sessions for speakers to address questions and comments from the audience. With the in-depth and wide-ranging exchanges that took place, the conference was a major success. 

Ha Thu