Custom models work better for op risks, research finds

Bayesian approach touted for mis-selling and other management failures

boutique-tailor-made-concept-1
Made-to-measure models beat Basel's buckets, paper argues

One-size-fits-all models are inferior to custom-built alternatives when estimating specific operational risks, according to new research. The findings apply particularly to the dangers arising from internal management failures, such as payouts for the mis-selling of retail financial products.

In the UK, banks have paid a combined £24.8 billion over the past five years for the mis-selling of payment protection insurance to retail borrowers.

In a forthcoming paper for the Journal of Operational

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net 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 individual account here: