Op risk appetite: Do firms have a balanced diet?
A balanced diet?
Financial services firms are still struggling to adequately set and manage operational risk appetite. Although there is no formal requirement under Pillar I of the Basel II Accord for firms to submit a statement of appetite for op risk, under Pillar II regulators are looking for banks to give an indication of their defined appetite and tolerance in this area. If a firm does not set an op risk appetite, it would be very difficult for it to pass the ‘use' test by demonstrating to regulators that
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