Risk Watch with Alberta QUARCOOPOME: The process risk factor – a risk management perspective


The first step toward success is taken when you refuse to be a captive of the environment in which you first find yourself” …MARK CAINE

This week, I have decided to share an extract from my new book “The Modern Branch Manager’s Companion” published in March 2021. It is a 440 paged book with 29 chapters of very relevant material for supervisors, managers and upcoming managers. This comes under the chapter: Fighting the red flags in Operational risk. Please read on…..

“Another set of red flags in branch banking is Process Risk.

What is a Process? According to the Cambridge Dictionary, a process is defined as: “A series of actions you take in order to achieve a result”. Banking transactions pass through a series of processes in the customer satisfaction chain. The typical bank branch processes comprise a long list. Here are a few:

Staff training, account opening, cash handling and vault management transactions, cheque processing, credit appraisal and analysis, monitoring, recoveries, cheque requisition, Anti-Money Laundering, Customer service, feedback and recovery processes, electronic banking, security, and so on. At each point in the process, a variety of risk issues confront the bank, especially at the branch, hence the need for adherence to embedded controls.

Questions to Ponder Over

Pause and ponder over the following questions:

  • Do you have manuals or operational guidelines for the various transactions carried out in the branch?
  • Who owns the process manuals?
  • Is the process manual “staff and customer friendly”?
  • Are the processes applicable to the current systems and operations of the bank?
  • Is the manual mainly applicable to universal banking and not to the MFI or Savings and Loans companies?
  • Is it a white elephant, beautifully printed and bound, gathering dust or locked up in the manager’s cabinet?
  • Is it the property of the head of department who quickly shows it to visiting Bank of Ghana or other Regulatory officials, as evidence that the departmental targets are on course, but who unfortunately is not aware that they are not being used by the branches?
  • Have relevant extracts been sent through the intranet or emails, or printed for staff to use?
  • How are the instruction guides or new processes disseminated to end users? Does the manager understand the instruction/methodology before dissemination downstream? Is it something treated as “Ooh, as for this, it is for the Operations people, I don’t need to understand it, so long as the work goes on?”
  • Do outsourced staff who have no email or are not on the official email list, been given extracts to read and even sign as having read?
  • Has there been any concerns about some grey areas requiring review to make it more meaningful?
  • When was the manual last reviewed?
  • Is the manual based on manual operations, while the bank is currently computerized?
  • Was the manual written with an experienced and knowledgeable person involved to take care of risk issues or surprises?

The above questions we have pondered over bring out a few salient reminders.

Red Flags in Process Risk.

  1. a) Procedural manuals need to be properly designed, reviewed, customized, disseminated, assimilated and adopted by users to make them effective.
  2. b) The absence of procedural manuals has serious implications such as ignorance displayed by the staff, lack of uniformity in service delivery resulting in the staff resorting to the use of logic instead of banking principles.

At each point in the process, a variety of risk issues confronts the bank, especially at the branch, hence, the need for adherence to processes, which act as a guide as well as a control.

Getting Customers at all Costs

These days, some bank officials, in their quest to get customers at all costs raise concerns when there is the need to infuse risk management principles into the transactions. A few examples of what people are saying as they work, amid unrequited customer worship, are:

  • “Let us think more logic instead of the so-called banking principles”.
  • “Let’s be practical, after all, we are in a digital age”.
  • “Convenience, anywhere, everywhere, whatever, business continues”.
  • “Let’s do it. The customer will go elsewhere and move the account”.
  • “The competition is getting stronger. Let’s do whatever it takes”.
  • “The consequences can be managed later. Let us move on and grab the business”.

Compromised Manual Account Opening Processes

Most frauds can be traced to the account opening stage. A Sales Executive who is under pressure to meet targets can compromise the account opening procedures to meet the targets. If you are a Supervisor in charge of vetting account opening documentation, watch out for the following signals:

  • For business accounts, were the other directors, partners, or trustees not present at the account opening? If it is worth having the account, why don’t you defer or arrange a meeting off-site to confirm their existence and the particulars being presented? Many officers have been convinced to approve account opening, using the particulars of non-existent customers.

Mis-matched Services

Bank services and products are not to be sold to every Tom, Dick and Harry.

  • Are you selling products like debit and credit cards, cheque books, and e-banking products to unqualified persons? Was the e-banking application form submitted by an illiterate? Was it thumb printed? Check again. It is likely that this payment channel will be operated by third parties instead of the customer, resulting in future claims on the bank. Let us not sell e-banking products just to meet targets. It is also part of the banking relationship and should not be taken for granted.

E-mail correspondence from some illiterates although wealthy customers should be confirmed. Ask yourself, if the person is definitely not computer literate, someone else is acting on his or her behalf. Any indemnities?  Any power of attorneys? Some importers have been defrauded by cyber fraudsters who misdirect their wire transfer instructions originally meant for their principals abroad. Relationship Managers of such customers should assist them regularly.

Cheques and E-payments Processing

The cheque is one of the most convenient and yet one of the most risk-prone instruments in banking. Many process risks involve red flags in cheque payment system. Within the past decade, many banks have suffered massive losses at the hands of cheque fraudsters. There are concerns of many professional bankers, about the manner in which the cheque payment system is being complicated with unlawful practices by the bankers themselves, in their bid to curb the rise in cheque fraud.

Despite the probability of cheques eventually being stopped in the near future, it is recommended that all branch banking staff undergo refresher training on the legal principles covering the cheque payment system. It will likely be phased out within the next five years, if not earlier. However, it is important to know the implications of its usage so long as it is still legal tender and governed by statute. Within the past few years, other payment systems and e-banking are also being substituted for cheques and the processes that cover e-banking and its payment system should be strictly adhered to, to prevent cyber fraud.

Let us be wary of customers who regularly stop cheques, put off their phones to avoid confirmation of their cheques upon presentation at the banks. Look at the new breed of customers who insist that every cheque issued should be confirmed by him or her! This is definitely not banking and such customers may do your bank more harm than good. Explain the cheque process to them so that more third parties can trust the cheque as a means of payment. The cheque must not be seen only as a payment instrument to be honoured according to the “whims and caprices of the customer”. Although bankers have a duty of care towards their customers, the cheque payment system should not be abused.

There are numerous red flags associated with not adhering to the procedural manuals, so do yourself a favour by making a checklist of some of the red flags highlighted and do a self-audit of your branch. Perhaps you can identify more red flags and stop them from being hoisted”.

For more insights on this topic, please book a copy of my new book, “THE MODERN BRANCH MANAGER’S COMPANION” which involves the adoption of a multi-disciplinary approach in the practice of today’s branch management. It also shares invaluable insights on the mindset needed to navigate and make a difference in the changing dynamics of the banking industry. Call 0244333051 for your doorstep delivery.


Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of Three books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story” and “The Modern Branch Manager’s Companion”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.


Website www.alkanbiz.com

Email:[email protected]alkanbiz.com  or [email protected]

Tel: +233-0244333051/+233-0244611343


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