What Are Middle Office Operations?

Malcolm Tatum

In the business world, middle office operations are the functions associated with management of information that is in the possession of the company, as well as monitoring the distribution of that knowledge throughout the entire business structure. To accomplish these tasks, the middle office will interact closely with the two other main types of offices found within a company, known as the front office and the back office. The nature of middle office operations normally calls for monitoring levels of risk, overseeing systems that are part of the information technology setup of the company, and also working as the conduit through which data is provided on an as-needed basis to the front and back offices.

Middle office operations typically includes IT management.
Middle office operations typically includes IT management.

When it comes to finances, middle office operations often focus on identifying and managing the level of risk that the company assumes in order to do business. This requires not only assessing risk in terms of purchasing investments, but also working with the front office to identify the risk of doing business with certain clients. Internally, middle office operations usually include risk management that is focused on issues such as loss prevention due to employee theft, losses incurred due to unsafe conditions at job sites, and other situations that could cost the company a significant amount of money over time. To accomplish these goals, the middle office relies heavily on data collected by the back office in terms of profits and losses, and the underlying reasons for those activities.

Middle office operations also include the management and oversight of the company’s information technology systems. Here, the goal is to make sure the flow of information between different departments is monitored, restricted when and as necessary, and that no data is lost due to a failure of one or more devices that make up the company network. Information technology (IT) managers as well as others assigned to this department will engage in troubleshooting computers and other devices that house data used by both the front and back offices, be involved in restructuring the network to meet the needs of a growing company, manage updates on software and hardware, and all other functions that are necessary to keep a network in proper working order.

The importance of middle office operations cannot be understated. When efficiently carried out, operations of the middle office provide a foundation for the functions of the front and back offices, while also serving as the means of protecting data that is crucial to the company operation. Weakness in the middle office will quickly have an adverse effect on both the front and back offices, possibly to the point of crippling the ability of the company to function.

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