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.
Consolidating risk management and compliance silos in financial services
This white paper explores the key challenges and priorities for firms looking to unify risk management and compliance applications via a single enterprise-wide platform
Cyber insurance costs still rising, say big banks
Op Risk Benchmarking: Cost of covering same exposure as last year now “somewhat” or “significantly” higher
Op risk data: UBS takes a giant Greensill pill
Also: Nasdaq insider trading rap; Trafigura travesty; further Citi fat-finger fail. Data by ORX News
Does Basel’s internal loss multiplier add up?
As US agencies mull capital reforms, one regulator questions past losses as an indicator of future op risk
Banks must break data silos to improve pricing decisions
Data consistency is increasingly key to judging risk and reacting quickly in a crisis, writes former XVA practitioner
US election a ‘classic inflection point’ – Rory Stewart
Risk Live: Podcaster and former politician talks geopolitical risk and UK politics in keynote speech
AI hack threat forcing banks to review cyber controls
Risk Live: AI lowers barriers to entry for phishing, say firms; more common controls needed
Op risk managers say models will survive phase-out of AMA
Risk Live: Supervisory focus expected to shift to Pillar 2 capital, and ILM may make a comeback in Europe
Bank of America’s Kris Fador elected FS-ISAC board chair
Industry consortium for cyber security also adds new board directors from Swift, PNC, Truist and CME
Op risk data: Japan’s giant bitcoin break-in makes a monster loss
Also: Citi’s fat-finger fallout; HSBC pays for unfair customer treatment; Visa and Mastercard fined over ATM fee-fixing. Data by ORX News
At BayernLB, Nykredit and Erste, op risk charges hit multi-year highs
Annual model recalibrations responsible for double-digit rises
Norinchukin hit with 54% rise in op RWAs
Recalibration of underlying parameters is first under new standardised measurement approach
Drilling for default: dry run gives CCPs a Lehman-like lesson
Member default simulation finds standardisation and porting could help in a crisis, and moots unscheduled repeat drill
Fed needs to fix discount window op risk – ECB official
Suggests the BTFP might have been unnecessary if existing US facility was more reliable
Op risk data: TD Bank takes US reg pill in purported drug-related AML fails
Also: SCB fraud bill rising fast; Postbank pain for Deutsche Bank. Data by ORX News
Breaking out of the cells: banks’ long goodbye to spreadsheets
Dealers are cutting back on Excel amid tighter regulation and risk concerns
Six Chinese banks set market risk records in Q1
Market RWAs spike 63% overall in first disclosures after rules update
Op risk hits all-time highs at three Nordic banks
Regular updates drive record rises at Handelsbanken, Nordea and SEB
For a growing number of banks, synthetics are the real deal
More lenders want to use SRTs to offload credit risk, but old hands say they have a long road ahead
How Ally found the key to GenAI at the bottom of a teacup
Risk-and-tech chemistry – plus Microsoft’s flexibility – has seen US lender leap from experiments to execution
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements