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.
Machine learning enters battle against financial crime
Standard Chartered and Barclays using AI to detect money laundering violations
End of an era: Credit Suisse dissolves resolution unit
The Swiss bank’s SRU reduced its total leverage exposure in 2018 to $30 billion – below the bank’s end-year target of $40 billion
Aussie banks: a right Royal mess
Misconduct probe sparks board changes and bout of introspection at Big 4
Operational risk measurement: a loss distribution approach with segmented dependence
This paper proposes an approach, called the loss distribution approach with segmented dependence (LDA-SD), which can model the different dependencies of HFLI and LFHI losses in the framework of LDA.
Apac bank boards: light on risk experience
Survey of 24 large Apac bank board risk committees shows dearth of risk managers
Op risk data: $1.5bn subprime hit for GE Capital
ED&F Man’s commodities loss; cyber events spiral in 2018. Data by ORX News
ING trims op risk charge by 11% in 2018
Bank benefits from AMA model upgrades
Metro Bank execs under scrutiny after loan probe snafu
Lender could see capital buffer rise after admitting regulator, not bank, discovered errors
Model risk chiefs warn on machine learning bias
ML model outputs open to “potential bias sitting in your datasets”, says RBS model risk head
Banks divided on op risk approaches
EU banks favour standardised approach, North American and Australian lenders the AMA
Top 10 operational risk losses of 2018
Mega-fraud at China’s Anbang pushes up total losses year on year; SocGen suffers double blow
Op risk data: JP fined $135m over depository receipts
Top five losses, plus review of Barclays whistleblower fine. Data by ORX News
Fed economists float new way to project op risk losses
Researchers suggest combining firm’s size with loss history to best predict losses under CCAR
AIIB risk chief on steering China’s World Bank rival
Martin Kimmig on the Asian Infrastructure Investment Bank’s challenge of overcoming patchy credit data
Fall in market risk prods UK bank RWAs lower
Total RWAs amounted to £2.9 trillion at end-September
Brexit may spur higher op risk losses – EBA
Largest five op risk losses in 2018 cost equivalent of 2.1% of EU bank's average CET1
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.
Op risk data: SocGen hit with $95m money laundering fine
Citi, JP Morgan settle Sibor rigging claims; Europe matches US on AML fines. Data by ORX News
Op risk jumps $7 billion at Aussie banks
Year to year, op RWAs have swelled $24 billion
Basel turns its attention to operational resilience
New working group will focus on business continuity in the age of cyber threats
UK bank misconduct charges dwindle
Six of seven stress-tested banks report 50% fall in legal and regulatory reserves
Basel’s archaic op risk taxonomy gets a makeover
Industry moves to revise out-of-date categories that feature risks such as cheque fraud