Adequate communication about operational risk in the business line

Udo Milkau

Abstract

ABSTRACT

While there is an established framework for quantitative modeling of operational risk as a "lingua franca" on an expert level, active operational risk management in the business line as "first line of defense" requires adequate communication with and between nonexperts, ie, nonstatisticians. Decision makers (management) and process experts (staff) have to be able to implement the concepts of statistics and risk in their daily business, and the risk of misunderstanding those concepts in the business line has to be avoided. In this paper, a pragmatic alternative with a simplified approach to adequate communication of operational risk with and within the business line is suggested.