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.
Top 10 op risks 2019: organisational change
Missteps during strategic change open up a grab bag of different risks
Top 10 op risks 2019: IT failure
Worries amplified by conspicuous mishaps and regulators’ new focus on operational resilience
Top 10 op risks 2019: IT disruption
Cyber attacks present multi-faceted threat, but banks and regulators are fighting back
Top 10 op risks 2019: data compromise
Big data provides big target for hackers, as banks wrestle with risk of monetary and reputational loss
Top 10 op risks 2019: mis-selling
Concern over sales practices remains amid economic and political uncertainties
Top 10 op risks 2019: data management
GDPR fuels fears of mega-fines for data-handling missteps
One-third of US G-Sib capital due to op risk
Op risk share of total RWAs has increased over three years
Data theft leads top 10 op risks survey for 2019
Fears of data breaches eclipse concerns over disabling cyber attack; IT failure and Brexit enter top 10
PRA's Pillar 2 add-ons reflect mixed verdict on UK banks
Median CET1 Pillar 2A charge for big six banks rises to 2.25%
Op risk data: losses focus attention on bank resilience
Also: StanChart’s control fail fines, plus three losses in Russia. Data by ORX News
An alternative approach for the operational risk assessment of a new product
The aim of this paper is to provide a new operational risk management framework to identify and mitigate the operational risk exposure arising from a new product.
Execution issues dominate UK bank op risk losses
This category of risk accounted for 47% of op risk losses on average at five banks
Op RWAs surge at Wells Fargo, dwindle at other G-Sibs
Higher capital charges a knock-on effect of a slew of misconduct scandals
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