Ways of applying operational risk management in banks

The banking sector should rank foremost among the many sectors of the economy that have undergone drastic changes in the last couple of decades or so. The convergence of two colossal factors – globalization and the development of technology – has made inroads into the banking sector, impacting it with a force that was seldom seen earlier.

The number one area of the banking sector to be affected by these changes is operations. Many factors such as credit, software, etc. need to be regulated for their risks. However, the core of the banking sector is operations. Because of this, operational risk management in banks is the highest priority for banks.

The Basel Accords

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The primacy of operational risk management in banks can be understood from the fact that one of the most important regulations aimed at the banking sector, the Basel Accords, a series of plans to regulate the banking sectors around the world; has operational risk management in banks on top of its agenda. Operational risk management in banks is one of the four areas identified at the second of these conferences, Basel II, the others being regulations concerning capital allocation, disclosure requirements and regulatory arbitrage.

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Operational risk management in banks according to Basel

The Basel Accord takes a very comprehensive view of operational risk. It describes operational risk as loss that can occur from a variety of reasons, all of which are linked to the core banking structure. The Basel Accord sees risk as something that can happen from any of the operations concerning the bank. It requires operational risk management in banks to take all of these factors into consideration before arriving at solutions to prevent loss from these operations.

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From the Basel Accords perspective, operational risk management in banks need to take into consideration the following events and identify all of these in identifying frauds and losses:

Internal fraud

Any fraud from any of the bank’s employees, insider trading, false reporting of profits are among the kinds of activities listed by Basel as being part of internal fraud.

External fraud

External fraud can happen from a number of sources. It could be robbery, burglary, hacking of security systems or check bounce. These are part of operational risk management in banks.

Employee fraud

Employees can be a major source of bank fraud. Steps towards mitigating actions from employees that endanger the functioning of the bank constitute a major step in operational risk management in banks.

Other kinds of frauds

Operational risk management in banks has to also take other sources of fraud. These can be from wrong entry of accounts, improper documentation for credit or loans, etc.

Ways of applying operational risk management in banks

Basel II has suggested methods which banks can take to apply risk management in their sector. These include:

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FDA Releases New Guidance to Advance Digital Medical Tech

Digital tool use is growing, and rapidly. To keep up with these changes, the Food and Drug Administration released a Digital Health Innovation Action Plan over the summer. It aimed to redesign medical device regulation to effectively address new tools, while also making way for innovation in the field.

The FDA quickly followed up the plan with several initiatives, including the launch of its Digital Health Software Precertification Pilot Program, which looks to fast-track the development and uses of digital health technologies. The FDA chose nine companies to participate in the program in September, including Fitbit, Samsung and Apple, among others.

Now, to close out the year, the agency has released three policy documents that will shape future health IT oversight and innovation.

“We recognize that our regulations play a crucial role in the efficient development of such technologies. Therefore, our approach to regulating these novel, swiftly evolving products must foster, not inhibit, innovation,” FDA Commissioner Scott Gottlieb said in a statement. “Moreover, we must always lean in the direction of enhancing access to more information — not restricting information flow — given the ability of reliable information to positively impact daily life.”

Aside from encouraging innovation, the three new guidances — two drafts and one final — also address key provisions of the 21st Century Cures Act that seek to lay out the FDA’s role in digital health — where it is needed and where it is not.

These three new guidances include:

A Clarifying Look at Clinical Decision Support Software

As the pool of health data grows thanks to technologies such as wearables that collect data on everyday activities, the need to sift through data and use it to create actionable insights is rising. Backed by machine learning, clinical decision support (CDS) software aggregates and digests healthcare data to help inform or support clinician decisions on treatment options, diagnostic tests and more.

“This type of technology has the potential to enable providers and patients to fully leverage digital tools to improve decision-making,” Gottlieb said. “We want to encourage developers to create, adapt and expand the functionalities of their software to aid providers in diagnosing and treating old and new medical maladies.”

The FDA hopes to do this by releasing a new draft guidance that will clarify which types of CDS will not qualify as medical devices, and therefore not fall under FDA regulation.

Essentially, the guidance outlines that CDS or similar patient decision support (PDS) software that allow the clinician to “independently review the basis for the recommendations” will not fall under FDA guidance. Software that analyzes or processes “images, signals from in vitro diagnostic devices or patterns acquired from a processor like an electrocardiogram” and uses these analyses to make treatment recommendations will fall under FDA oversight.

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Biocompatibility testing and evaluations for medical devices

Biocompatibility testing and evaluations for medical devices is a vital component of patient safety, for it is the only effective means to ensuring that a medical device or any related material, when it happens to come into contact with the patient’s body has to not only perform its intended purpose and function; it should also not result in adverse reactions for the patient.

When medical devices and/or materials come into contact with the patient’s body, they can cause problems or what may be termed adverse effects that can be either short-term or long-term adverse effects to the body. These effects, called acute to chronic, can result in mutagenic effects. It is to prevent the occurrence of such events that biocompatibility testing and evaluations for medical devices has to be carried out.

These evaluations for biocompatibility of medical devices are done to evaluate the interaction between a device and anything it comes into contact with within the patient’s body, such as cells, tissue or body fluids. Essentially, device biocompatibility is assessed to prevent biological risks from happening to the patient.

ISO standard for biocompatibility testing and evaluations for medical devices

The International Standards Organization (ISO) has a specific standard for carrying out and ensuring biocompatibility testing and evaluations for medical devices. It is called ISO 10993-1: 2009, and makes biological evaluation part of a structured biological evaluation program that comes under a risk management process. All these are carried out in accordance with ISO 14971.

ISO 10993-1, Biological Evaluation of Medical Devices – Part 1 The basis for biocompatibility testing and evaluations for medical devices is the Risk Management Process. This is the most prevalent standard for assessing biocompatibility testing and making evaluations for medical devices. In requiring biocompatibility testing and evaluations for medical devices to be conducted in compliance with Principles of Good Laboratory Practice (GLP) and/or ISO/IEC 17025 and requiring the consideration of evaluation of local and systemic risk factors; the ISO 10993-1 is considered the basis for determining the subsequent, necessary biocompatibility testing and evaluations for medical devices.

What factors are tested? In line with the principles set out in ISO 10993-1: 2009 on biocompatibility testing and evaluations for medical devices, specific testing is prescribed based on two factors: a) the type and the intended use of a medical device or related material, and b) the kind, tenure and extent of contact the medical device makes with the body.

ISO 10993-1: 2009 on biocompatibility testing and evaluations for medical devices requires assessment to be made for the following among others:

  • Cytotoxicity
  • Genotoxicity
  • Sub chronic toxicity
  • Sensitization
  • Irritation or intra-cutaneous reactivity
  • Implantation
  • Haemocompatibility
  • Systemic toxicity, etc.

Antibiotics sales for use in U.S. farm animals dropped in 2016: FDA

CHICAGO (Reuters) – The sale and distribution of antibiotics approved for use in food-producing animals in the United States decreased by 10 percent from 2015 to 2016, a U.S. Food and Drug Administration (FDA) report said on Thursday.

It was the first decline in year-to-year sales since the FDA began collecting the data in 2009, according to food and consumer health groups.

For years scientists have warned that the regular use of antibiotics to promote growth and prevent illness in healthy farm animals fuels dangerous, antibiotic-resistant “superbug” infections in people.Major U.S. food companies including McDonald’s and Tyson Foods have stepped up efforts to curtail, and in some cases eliminate, antibiotics in their products.

“Actions speak louder than words, and the most action we’ve seen on antibiotics has come from food companies,” said Matthew Wellington, Antibiotics Program Director of public interest campaigning group U.S. PIRG. “We’re cheering this good news.”

Last month, the World Health Organization urged farmers to completely stop using antibiotics to enhance growth and prevent disease in healthy animals.

An estimated 70 percent of the kinds of antibiotics that are also used to fight human infections and in surgery are sold in the United States for use in meat production.

In 2016, sales and distribution of those medically important antibiotics for food production fell 14 percent, the FDA said.

Medically important antimicrobials accounted for 60 percent of the domestic sales of all antimicrobials approved for use in farm animals in 2016, the agency said.

The FDA’s data show chicken accounting for 6 percent of medically important antibiotic sales, with swine at 37 percent and cattle at 43 percent.

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Cyber security a growing concern for Canadians

Canadians are more concerned about cyber security than they were in 2016.

According to the Canadian Internet Registration Authority (CIRA)’s latest Internet Factbook, 75 per cent of Canadians are worried about the threat of cyber attacks against organizations they know, a 13 per cent increase from 2016.

They’re also less likely to make online purchases from a business after a cyber attack: Nearly 45 per cent of Canadians surveyed said they would probably stop buying items online from a business following a major cyber attack, which happens nine times more often per capita in Canada than in the U.S.

“The first step to building a better online Canada is understanding the experiences, perceptions and needs of Canadian internet users,” Byron Holland, CIRA president and CEO, said in a press release.

Jacques Latour, CIRA’s chief technology officer, echoed Holland’s statement, while calling for investment in Canada’s Internet infrastructure, which he said would contribute to a healthier online environment in Canada.

“Over three quarters of Canadians are concerned about their personal information on the Internet if it is stored or routed through the U.S,” Latour said. “Investing in Canadian Internet infrastructure, which includes local Internet exchange points that help Canadian data stay within our borders, should be a priority for governments, businesses and Canadian Internet service providers.”

But it’s not just large companies that have to contend with cyber attacks. The Canadian Chamber of Commerce’s Cyber Security in Canada report says 71 per cent of all breaches impact small businesses.

 

 

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FDA’s program to speed up drug approval shaved nearly a year off the process

Speeding the pace at which potentially lifesaving drugs are brought to market was a rallying cry for Donald Trump as a candidate, and is a stated priority of his Food and Drug Administration commissioner, Dr. Scott Gottlieb. But a new study finds that programs already in place were routinely shortening the drug development process by close to a year, and sometimes much more.

Shorter drug-development timelines hold the promise of getting new medications to suffering patients more quickly. But when it comes to getting a drug candidate through clinical trials and FDA review, time is also money. Faster approval means drug companies can begin profiting more quickly from their discoveries. And that may (or may not, according to whom you talk to) result in lower drug prices.

In a Research Letter published Tuesday in the journal JAMA, a trio of health economists from Brigham and Women’s Hospital in Boston set out to test whether and how four FDA programs shortened the length time it took for proposed prescription drugs to get from their earliest clinical trials to market approval.

Of 174 drugs and biologic therapies approved between January 2012 and December 2016, 105 (or 60%) traversed the FDA evaluation process with one of four designations aimed at speeding the path to approval. The 69 candidate medications that had no such hurry-up designations took between 6.5 and 10 years to proceed from the start of human trials to FDA approval, with a midpoint of eight years.

Candidate medications evaluated under one of the four accelerated programs took between 5.1 and 10.1 years to cover the same ground, with a midpoint of 7.1 years.

Those faster speeds were largely attributable to two programs.

One, instituted in 2012, compresses clinical trials, dedicates FDA personnel to provide advice, and streamlines the FDA evaluation process for experimental drugs that may provide “breakthrough” therapy for a disease. Half of the drug candidates that got the breakthrough designation sprinted from the start of human clinical trials to FDA approval in 4.8 years or less, compared with a median start-to-finish time of eight years for drug candidates with no expedited designation.

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3D Printing: FDA Finalizes Guidance for Medical Devices

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The US Food and Drug Administration (FDA) on Monday finalized guidance on medical device additive manufacturing, also known as 3D printing.

The guidance finalizes the draft version from May 2016 and largely keeps intact the recommendations and considerations laid out in the draft.

FDA Commissioner Scott Gottlieb said Monday that the guidance “will help manufacturers bring their innovations to market more efficiently by providing a transparent process for future submissions and [ensures] our regulatory approach is properly tailored to the unique opportunities and challenges posed by this new technology.”

Gottlieb also said that FDA has now reviewed more than 100 3D printed medical device applications, including knee replacements and implants used for facial reconstruction, up from the 85 reviewed at the time the draft was released.

FDA describes the guidance as a “leap-frog” guidance in that it is meant to provide manufacturers about its initial thinking on manufacturing 3D-printed devices and how to characterize and validate such devices. The final guidance also emphasizes that the recommendations made will not be applicable to all 3D-printed devices due to the wide array of available additive manufacturing technologies and materials.

Some changes in the final guidance include new considerations for handling complex design files and cybersecurity considerations for patient-matched devices.

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