Capital market solutions for op risks: Does a credit derivative model make sense?


There’s a good case for creating operational risk derivatives using credit derivatives as a model, argues Penny Cagan. But the idea is not free of pitfalls

Banks could in theory manage their operational risks using swap and options contracts that would protect them against losses from such hazards as fraud, technology failure and trade settlement errors.

Such op risk derivative contracts could help reduce the amount of capital banks already tie up to guard against operational risks. They could

To continue reading...

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: