Quantifying Operational Risk

In my last 12 months at ConocoPhillips, we did some significant work on quantifying the process and impact of trade entry errors.  It was surprising to see how data entry errors could drive metrics like Value at Risk and P&L. 

I hadn't thought about this for a long time, but I was going through my desk last night and found my notes from when I presented at Energy Risk, the premier energy risk management conference held annually in Houston, Tx.  I co-authored the paper published in the Global Association of Risk Professionals (GARP) magazine below with Kevin Kindall and Xianqiao Chen.

We wrote a pretty good paper.  What was better, was I had built a model to analyze the daily mark-to-market P&L by business unit or for the entire trade floor.  It gave us the ability to see daily profit and loss changes grouped by price changes, new transactions, and data entry errors.  I don't have PDF copy of that model.  I'll have to scan the one that is in my folder.