Operational risk
WHAT IS THIS? Operational risks are those arising from people, processes and systems – the biggest form of exposure for many industries, but one that was neglected by financial firms until the collapse of Barings Bank in 1995. It was added to the Basel capital framework in 2004, but attempts to model operational risk were dealt a heavy blow by the huge, unforeseen losses suffered by banks in the aftermath of the financial crisis.
Credit Suisse’s op risk up $6.5bn on subprime-era litigation
Increase offsets the removal of Archegos-related capital add-on by Finma
On modeling contagion in the formation of operational risk loss
This paper models an overall operational risk loss caused by the accumulation of intermediate losses incurred at each process via a mechanism of network contagion across distinct processes within the boundary of a bank.
‘It’s the economy’: forecasting an op risk climate change spike
History of op risk suggests economic impacts of climate change could exacerbate losses, writes op risk head
Libor is ending, and corporates need to know their options
Banks must speak to Main Street now if US Libor transition is to succeed, argue ARRC working group leaders
UK banks’ RWAs near record low – BoE
Lower credit and counterparty RWAs led the quarterly drop, latest figures show
Op risk data: Robinhood to pay $70m for meme stock failings
Also: Deutsche Bank’s wine corked after €10m FX swaps settlement. Data by ORX News
Mizuho EU CRO reveals his top risks – they may surprise you
Fears over technology dominate Wolfgang Koehler’s list of greatest risks for Mizuho’s EU unit
An approach to simultaneously assess operational risk and maturity levels in information technology management
The aim of this paper is to investigate the operational risk and maturity level of IT in an anonymized financial institution, based on the American Productivity and Quality Center benchmark and control objectives for information and related technologies.
Unlocking the potential of a firm-wide and systematic approach to operational resilience
This webinar explores best practices in response to regulatory policy and supervisory guidance, offering practical approaches to achieve a mature and robust operational resilience programme
Risk governance, market competition and operational risk disclosure quality: a study of the ASEAN-5 banking sector
This paper investigates the impact of risk governance and market competition on banks' operational risk disclosure (ORD) quality (total and voluntary) in the Association of Southeast Asian Nations (ASEAN-5) banking sector
Singapore banks step up their game against internal fraud
Firms respond to MAS warnings about dangers of remote working spurred by Covid
Op risk data: UBS, Nomura, UniCredit hit with $450m cartel fine
Also: State Street collared for expense overcharging; S&P’s Vix mix-up. Data by ORX News
Cyber attacks top threat to US financial system – bank CEOs
Lawmakers signal readiness to act as finance chiefs warn of heightened cyber risks
Commerzbank’s op RWAs hit 10-year low
The bank added 20bp to its CET1 capital ratio in Q1
Op risk data: Money laundering gaffes cost ABN €480m in penalties
Also: Turkish crypto exchange’s missing $2bn; online payment scams rise during Covid. Data by ORX News
New UK op risk rules elevate management over measurement
Under op resilience rules, firms must plan for all severe stresses, whatever their probability
Op risk update lops £72m off NatWest’s capital requirement
RWAs for operational risk fell 4% in Q1
The economic cost of a fat finger mistake: a comparative case study from Samsung Securities’s ghost stock blunder
This paper quantifies the economic cost of Samsung Securities’s ghost stock blunder using the synthetic control method.
Op risk data: Sberbank suffers $108m supermarket clean-out
Also: Copper trader buys $36m of worthless bricks; big lenders hurt in $400m mortgage fraud. Data by ORX News
Fed economist sounds alert over op risk capital arbitrage
Insurance payouts could allow banks to pare back capital without equivalent reduction in risk, says paper
Users clash with ASX over changes to its DLT settlement system
Industry groups and tech experts worry that proposed last-minute changes will introduce new risks
Fraud op risk losses edged up at UK banks in 2020
An average 38% of losses by value last year were because of internal or external fraud
US regulators seek to tighten cyber incident reporting
New federal rule, mindful of Covid, will force firms to report serious incidents within 36 hours
The impact of culture upon operational risk management guidelines in the banking sector of selected Asian countries
The central banks of different countries regulate ORM according to the specificities of their national banking industry. This paper tests the hypothesis that such regulatory openness results in legal texts that are highly influenced by the culture of the…