Bringing down the house

There is evidence to support the claim that the subprime mortgage crisis in the US may have had its roots in operational risk problems. But just what caused the crisis, and could it have been averted if the firms involved had robust op risk frameworks in place? Victoria Pennington reports

The deeper you delve into the causes of the US subprime mortgage crisis – or market "correction" as some prefer to call it – the more convinced you become that operational risk problems were a central factor. Even though credit risk issues play a significant role, the fact that operational risk processes and procedures were relaxed or manipulated certainly contributed to the scale of the problem.