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.
Modeling systemic operational risk in the Covid-19 pandemic
This paper introduces existing and novel epidemiology models and investigates how government responses to the Covid-19 pandemic impacted these models.
Rost Bank rumbled – execs conspired in 107bn ruble ruse
Also: Citi stumbles on market abuse; Jefferies faces latest fine over phone misuse. Data by ORX News
Changes in operational risk and its determinants under Covid-19
The authors investigate the operational risk impact of the Covid-19 pandemic on Chinese commercial banks and the moderating effect of bank size, business diversification and regulatory records.
Op risk data: Banks dial in $600m loss for illicit phone use
Also: Santander staff mistreatment; cum-ex rumbles on; CFTC steps up scrutiny of swaps reporting. Data by ORX News
Using correlation to model op risk losses may be unsafe – study
Techniques for linking economic factors and bank losses produce varying – and sometimes contradictory – results
Risk Technology Awards 2022
The 2022 Risk Technology Awards recognised products and services that helped firms steer through the Covid-19 pandemic, a testament to the winners’ resilience in the face of unprecedented disruption and the key role they play in today’s markets. This…
Barclays adds £984m to ETN snafu bill
Market sell-off in Q2 has increased cost of buying back notes mis-sold by the bank in 2019
Banks may spend ‘billions’ to stop quantum hacking threat
Quantum-proof algo standards nearing completion, but enhanced cryptography won’t come cheap
Citi, BNY Mellon escape Collins floor
Both banks return above the threshold after just two quarters
Op risk data: SEC says no to Charles Schwab robo-adviser
Also: China steps up scrutiny of wealth management products; Libor fines still rumble on. Data by ORX News
How climate change may impact operational risk
This paper uses the ten laws of operational risk along with taxonomies for inadequacies or failures and their impacts, and it also draws parallels with past crises, in order to make systematic predictions.
Concentration risk add-ons too low at Ice and ECC, says regulator
Results of European stress test suggest shortfall of collateral for large commodities positions is equivalent to 17% of total required margin
Rethinking risk and operational resilience post‑Covid‑19
In a Risk.net panel session, convened in collaboration with Fusion Risk Management, experts discussed five themes on re-evaluating existing operational resilience strategies
Op risk data: Glencore hauled over the coals in $1bn+ bribery probe
Also: Russian banks in fraud fails; Citi’s fat-finger fumble; devil’s in the data detail. Data by ORX News
ORX to launch controls benchmarking service
App will be delivered via start-up tech platform led by former HSBC op risk chief
Correlations in operational risk stress testing: use and abuse
The paper presents an analysis of correlation effects of economic factors on the operational risk losses of a medium-large UK retail bank, and it recommends that causal factors that effect operational risk should be identified.
Polish mortgage claims push RBI’s op risk up 43%
Following the latest increase, op risk makes up 11% of the bank’s total RWAs
How will US regulators perform the Basel III balancing act?
Largest banks seek offsets for higher capital requirements caused by possible end of IRB, IMM
BlackRock calls for blockchain to fix futures processing snags
Asset manager wants industry to move faster in adopting “single source of truth” model
Op risk data: Deutsche greenwashing fine a regulatory red flag
Also: Class claim costs CA tribe $500m; Essilor eyeballs JPM in fraud case; Bank of Italy con job. Data by ORX News
French tax fraud verdict costs UBS $4.1bn of additional op RWAs
Extra capital charges will be split across the first six months of the year
US trading blunder costs Barclays £2.8bn in credit RWAs
The latest hit follows a £540 million provision to cover the over-issuance of structured notes
Investment banks: the future of risk control
This Risk.net survey report explores the current state of risk controls in investment banks, the challenges of effective engagement across the three lines of defence, and the opportunity to develop a more dynamic approach to first-line risk control