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.
Cyber security begins a shift to the risk department
Normally the province of IT, cyber defence is increasingly seen as a critical part of operational risk
JP Morgan cuts op risk capital by $12.5 billion
Operational RWAs down to $387.6 billion from $400 billion in the second quarter
Swift user break-ins a ‘repeat business’ for hackers
Cyber thieves have accessed the interbank messaging system through small, developing world banks
Swiss banks’ market risk drops by $12 billion
Lower risk levels drive quarter to quarter fall
Op risk data: Swiss banks suffer tax-dodging fines
ZKB settlement takes top spot in August loss list. Data by ORX News
US banks curb market risk
G-Sibs cut $31 billion of market RWAs in three months to June
Forward-looking and incentive-compatible operational risk capital framework
This paper proposes an alternative framework for setting banks’ operational risk capital, which allows for forward-looking assessments and limits gaming opportunities by relying on an incentive-compatible mechanism.
Modeling operational risk depending on covariates: an empirical investigation
In this paper, the authors apply a dynamic extreme value theory (EVT) model based on a nonhomogeneous Poisson process incorporating covariates to estimate frequency, severity and risk measures for operational risk.
Big firms deflect banks’ questions on third-party risks
From exchanges to software sellers, big players hang back on due diligence questions, banks say
SunTrust’s ‘swim lanes’ keep exposures in line
Bank has five bands of risk – a granular approach it says makes it easier to control exposures
European banks junk op risk modelling
Barclays and BNP Paribas move to standardised approach in the second quarter
New statistical approach proposed to tackle internal fraud
Tests improve on methods to identify anomalous data created by fraudsters
OCC won’t offer further guidance on ‘fourth-party’ risk
Onus is on banks to vet subcontractors during contract negotiations, regulator says
Scotiabank acquisitions come with risks attached
The bank’s RWAs jumped 9.4% in the third quarter
Risk monitoring through better knowledge-based risk processes
The aim of this paper is to propose a model that describes the integration of knowledge-based risks (via the processes of knowledge-based risk identification, analysis, evaluation and education) and knowledge-based risk repositories to support risk…
Risks building at three US G-Sibs
Risk-weighted asset density has increased at BNY Mellon, State Street and Goldman Sachs the most, across the eight US global systemically important banks
Wells Fargo adds $2 billion to op risk capital
Risk-weighted asset increases follow wave of regulatory sanctions
Top European banks shed $32 billion in op risk
5% average drop across 16 European banks reported quarter to quarter
PNC’s risk chief on life as an in-betweener
Regulatory relief has bypassed the 'super-regionals', says CRO
Operational risk: a forgotten case study
This paper is a historical case study of the GAS scandal and is the first to analyze it from the perspective of operational risk.
Risktech start-ups struggle to clinch big-bank contracts
Light on cash, risk management fintechs face an extended gauntlet most won’t survive
Op risk data: South Africa’s VBS Bank in $100m fraud loss
Top five events also include John Hancock, Deutsche Bank settlements. Plus PPI roundup. Data by ORX News
UBS’s CRO on the hunt for hidden risks
Swiss bank has rung the changes in its attempt to catch hard-to-measure risks, but “you are never safe”, warns Christian Bluhm
Capital add-ons rising for UK banks
Median Pillar 2A requirement across six biggest lenders hits 2.3%