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.
Stablecoins’ would-be lawgivers don’t know what they’re missing
Bills in US Congress focus on run risk, but more detail needed on operational challenges
Op risk data: Barclays bungles multi-billion-dollar note issue
Also: Russia sanctions redux; Lloyd’s of London names bullying and sexism brokerage. Data by ORX News
In roiling markets, fraud rises. Banks want to understand why
Disruption from Ukraine and Covid puts managers on alert for misconduct, as risk controls are stretched to the max
The top 10 op risks, reloaded
Survey to be expanded as part of benchmarking exercise
Banks tout CCAR-style stress tests for emergent risks
Extreme-but-plausible scenario planning is being applied to geopolitical events such as Ukraine conflict
Op risk data: Allianz dealt a $4bn blow for not-so-Alpha Funds
Also: Credit Suisse cops two cartel shops; banks get slapped in gender pay gap. Data by ORX News
Banks: sanctions evasion driving rise in money laundering risk
Attempts by oligarchs to siphon cash out of Russia sparks heightened scrutiny of AML alerts
Goldman exec: rogue algos could spark ‘systemic’ crashes
Device proliferation and digital assets also altering risk environment, says Europe op risk head
Op risk outlook 2022: the legal perspective
Christoph Kurth, partner of the global financial institutions leadership team at Baker McKenzie, discusses the key themes emerging from Risk.net’s Top 10 op risks 2022 survey and how financial firms can better manage and mitigate the impact of…
Top 10 operational risks for 2022
The biggest op risks for the year ahead, as chosen by senior industry practitioners
Top 10 op risks 2022: geopolitical risk takes centre stage
Ukraine invasion, western sanctions and Russian response seen driving big rise in cyber and supply chain risks
Russia sanctions put spotlight on banks’ dirty laundry
As punitive measures against Moscow increase, so do the risks to banks from financial crime
Europe’s banks brace for Russia-backed cyber retaliation
Beefed-up sanctions on Russia’s largest banks spark IT security alert; 100s of computers brought down in Ukraine
Banks hope new US rule will see AML judged on effectiveness
Proposed FinCEN ruling asks regulators to look beyond design to whether AML measures actually work
Preventing the unpleasant: fraudulent financial statement detection using financial ratios
In this paper, the authors investigate financial fraud in companies listed on the Athens Stock Exchange during the period 2008–18 and propose a model to detect fraudulent financial statements.
The Collins flaw: backstop turned binding constraint
US legislative tweak was meant to prevent banks from using their own capital models too liberally. It’s now something different
Revisiting the linkage between internal audit function characteristics and internal control quality
This paper revisits the linkage between internal audit function characteristics and internal control quality and proposes a random polynomial model for assessing ICQ.
Op risk data: Morgan Stanley, Capital One’s data breach double trouble
Also: Citi shells out $45m for misleading stock trading info; coding clangers cost Credit Suisse $9m. Data by ORX News
UBS sees $20bn RWA impact from Basel III
Increase expected to materialise by 2024 following the implementation of new rules on FRTB, CVA, credit and operational risk
Shell-company registry might not halt US dirty money, say experts
Observers raise questions over verifying beneficial owner info on proposed FinCEN database
Deutsche’s op RWAs down 10% in 2021
‘Bad bank’ unwinding pushed op risk at multi-year low
All top US banks below Collins floor
None of the eight systemic banks in the country above the threshold for the first time since 2015