# 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.

##### A review of the state of the art in quantifying operational risk

In this paper, the authors provide a comprehensive review of the different approaches developed to model operational risk, specifically focusing on the actuarial approach.

##### Global perspectives on operational risk management and practice: a survey by the Institute of Operational Risk (IOR) and the Center for Financial Professionals (CeFPro)

This paper presents survey results which represent comprehensive perspectives on operational risk practice, obtained from practitioners in a wide range of countries and sectors.

##### Banks warned of capital add-ons for legacy Libor contracts

UK regulators’ letter to firms could be followed by Pillar 2 charge to speed transition to Sonia

##### Op risk data: conduct risk losses top $600 billion since 2010 Swift hack targets State Bank of Mauritius; Capital One, Mashreq, hit by AML fines. Data by ORX News ##### Python – Is the buzz justified? Python is rapidly becoming the world’s most popular programming language and its versatility and ease of use has enabled it to achieve widespread adoption in finance, becoming the multipurpose tool of choice for quantitative analysts and other financial… ##### Predictive fraud analytics: B-tests In this paper, the authors look at B-tests: methods by which it is possible to identify internal fraud among employees and partners of the bank at an early stage. ##### Wells Fargo cuts$24 billion of RWAs

Optimisation efforts preserve capital ratio despite \$14.5 billion of cash returns to shareholders

##### Op risk data: SEC issues first fine under cyber risk rule

SocGen provisions for sanctions violations; has the SMR prompted more bank CEO resignations? Data by ORX News

##### Output floor to constrain almost half of G-Sibs – Basel study

The Basel III output floor will impose the single largest Tier 1 capital requirement on 46% of G-Sibs

##### Basel III op risk capital savings dissipate for G-Sibs

Median savings shrink to 5.1% from 19% at end-2015

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