OpRisk Survey Shows the Insidious Effects of Political Risk

Ariane Chapelle

As the saying goes, there are decades where nothing happens, and there are weeks where decades happen. A steep rise in uncertainty and instability in the global political order following the UK’s vote to leave the European Union and the election of Donald Trump as US president have certainly spurred a mini-revolution in the ranking of the top 10 operational risks this year, top spot notwithstanding.

The world will be dealing with the consequences of both events for years to come. But op risk managers don't have the luxury of time when it comes to making sense of such events; they need to start incorporating them into their risk frameworks straightaway.

Table 24.1: Top 10 op risks: 2017 vs 2016
  2017 2016
#1 Cyber risk and data security   Cyber risk
#2 Regulation ↑1 Conduct risk
#3 Outsourcing ↑3 Regulation
#4 Geopolitical risk new AML, CTF and sanctions compliance
#5 Conduct risk ↓3 Organisational change
#6 Organisational change ↓1 Outsourcing
#7 IT failure ↑1 Recruitment and retention
#8 AML, CTF and sanctions   IT failure
  compliance ↓4  
#9 Fraud new Terrorism

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