- September 8, 2018
- Posted by: admin
- Category: Current News
This paper introduces the concepts of operational risk management (ORM) as it should be applied to government debt management (DeM) in MEFMI member countries. It aims to provide a practical roadmap towards managing operational risks in DeM through a step by step presentation of the key principles, framework and techniques for ORM by debt managers.
The study is mainly based on primary data from use of questionnaires to explore and obtain information on the practice and implementation of ORM principles, framework and techniques in DeM operations in MEFMI countries. The primary data were supplemented with secondary data from MEFMI member countries’ DeMPA reports, where available.
The study sought to establish whether there are adequate ORM principles and frameworks in Debt Management Units (DMUs) within the MEFMI region. Gaps were identified in terms of poor policies and procedures, inadequate governance structures, and poor culture and awareness of ORM. There was limited practice of the usual six-step process in setting an ORM framework and limited practice of ORM techniques/tools.
The study suggests that there is a need for practical exposure and capacity building within the MEFMI region on ORM principles, framework and techniques for effective DeM. Debt managers can make improvements incrementally, factoring the resources available; since effective ORM is not all or nothing. This could be facilitated by partnering or collaborating with other institutions that would be willing to support. The paper will therefore be of value to government debt managers and offers policy recommendations on the practical application of ORM principles and frameworks.