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Op risk modelling evolves

Operational risk is devilishly difficult to model, but dealers and software vendors are making headway. Automated op risk reporting, profiling and sophisticated operational value-at-risk (VAR) modelling are finally beginning to catch-on in banks.

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In the past year alone there have been three high profile cases of ‘fat finger’ syndrome – that is, dealers entering into large erroneous trades. In May, 2001, a dealer at Lehman Brothers in London traded a £300 million lot instead of an intended £3 million. This precipitated a 120 point fall on the FTSE 100 index – temporarily removing about £40 billion from the value of the UK’s top

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Emerging trends in op risk

Karen Man, partner and member of the global financial institutions leadership team at Baker McKenzie, discusses emerging op risks in the wake of the Covid‑19 pandemic, a rise in cyber attacks, concerns around conduct and culture, and the complexities of…

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