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 info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

If you already have an account, please sign in here.

Register

Want to know what’s included in our free membership? Click here

This address will be used to create your account

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: