Operational risks, such as process inefficiencies, technology failures, and human errors, can disrupt treasury operations and lead to financial losses. This chapter examines tools and strategies for managing operational risks, with real-world examples to illustrate their effectiveness.
- Process Optimization
- Automation
- Automate repetitive tasks such as payment processing and reconciliations.
- Case Study: Healthcare Company
- Challenge: High error rates in manual payment reconciliations.
- Solution: Deployed Robotic Process Automation (RPA).
- Outcome: Reduced errors by 90% and saved 1,000 labor hours annually.
- Standardization
- Develop standardized workflows and documentation.
- Case Study: Logistics Provider
- Challenge: Inconsistent payment approval processes.
- Solution: Standardized workflows across regions.
- Outcome: Improved efficiency and reduced processing times by 20%.
- Technology Risk Management
- Disaster Recovery and Backup Plans
- Maintain redundant systems and data recovery protocols.
- Case Study: Financial Institution
- Challenge: TMS outage during critical transactions.
- Solution: Implemented a disaster recovery system.
- Outcome: Restored operations within two hours.
- Cybersecurity Measures
- Use encryption, firewalls, and multi-factor authentication.
- Case Study: Energy Firm
- Challenge: Payment fraud attempts via phishing.
- Solution: Deployed fraud detection software.
- Outcome: Prevented $3 million in fraudulent payments.
- Human Error Prevention
- Training Programs
- Regularly train employees on best practices and system updates.
- Case Study: Retail Chain
- Challenge: Errors in data entry for payment batches.
- Solution: Conducted quarterly training for treasury staff.
- Outcome: Reduced data entry errors by 50%.
- Approval Hierarchies
- Implement dual controls and approvals for sensitive transactions.
- Case Study: Manufacturing Firm
- Challenge: Unauthorized high-value payments.
- Solution: Established a two-tier approval system.
- Outcome: Eliminated unauthorized transactions.
