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.
Quants propose new method of calculating op risk VAR
So-called ‘incremental value-at-risk’ offers future snapshot of op risk exposure, authors say
A Chinese megabank and its CRO in the US
Frank Morisano has put together a risk team, his unit funds itself, and he’s banned cloud technology
Higher op risk charge follows UBS tax fraud verdict
Clash with French courts adds $2.8 billion to op RWAs
Life’s a breach: banks settle uncomfortably into GDPR
A year into exacting data privacy regulation, ramifications are becoming more tangible
Stoplight system could spot imminent meltdowns – study
Proposed traffic light system sifts through transaction data for signs of trouble
Modelling cyber losses could get easier – study
Cyber losses behaved much like non-cyber losses when grouped by severity, so perhaps less data is needed
Smart weaponry aids bank fight against money laundering
Advanced algos and machine learning gain credence as regulators encourage innovation
EU G-Sibs add €2.7bn of op RWAs in 2018
Op risk charge anticipated to jump €21.5 billion under Basel III
Op risk data: Europe’s AML drive follows Danske and ING slips
Also: top five losses include mortgage penalty for Citi and reporting fines for Goldman, UBS. Data by ORX News
The future of operational risk management
As the efficiency of operational risk management remains a top priority and pressure to maximise value increases, emerging technology could prove crucial. Nitish Idnani, leader of oprisk management services at Deloitte, explores how the oprisk management…
Fed preps draft white paper on cyber risk
US regulator seeks industry input for initiative on classifying and modelling threats
Op risk past is prologue for UK banks
UK banks will not be allowed to forget past misdeeds
Lower credit risk shrinks UK banks’ RWAs
Figures from the Bank of England show total RWAs for the UK banking sector amounted to £2.83 trillion at end-December
UBS hires Finma banks chief amid risk reorg
Schoch move comes after bank carves op risk and compliance unit out of central risk function
At EU banks, bad business practices led op risk losses
Misconduct trumped external fraud and process management failures
Introducing a novel system-of-systems axiomatic risk management technique for production systems
This paper focuses on conceptual and modeling frameworks in an attempt to explore qualitative and quantitative risk management techniques for hierarchical SoS risks, exemplifying the production systems for demonstration.
Cyber modelling masks scale of potential losses, study finds
Different statistical approaches produce big variations in future loss estimates, says Esma researcher
Legal charges topped £6 billion at UK banks in 2018
Majority of costs relate to legacy issues, including PPI and RMBS mis-selling
FCA steps up anti-money laundering spot checks
UK watchdog changes fincrime head amid speculation AML spot visits increasing because of critical FATF review
Op risk capital to jump 45% for European banks under Basel III
Some banks could see capital increases of more than 60%
Op risk capital: looking back in anger
Top 10 op risks survey shows industry has sights set on the horizon, even when regulators are looking backwards
Top 10 op risks 2019: theft and fraud
Rogue employees are costly, but the thought of cyber mayhem dominates managers’ concerns
Top 10 op risks 2019: outsourcing and third-party risk
Perfecting internal controls is meaningless when lax oversight of outsourcing offers back-door vulnerability