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 2021: IT disruption
Integrity of core systems paramount as risk managers battle outages and hacks in work from home era
Measurement of operational risk regulatory capital in the banking sector: developed countries versus emerging markets
This paper addresses operational risk as a fundamental risk type faced by banks in emerging and developed economies.
Bank supervision: lessons from the post-2008 banking crisis
This paper considers the learning points from official third-party reports produced in the wake of supervisory failures that can be applied to the management of front-line bank supervisors.
Regulatory arbitrage in the use of insurance in the new standardized approach for operational risk capital
Basel’s new standardized approach (SA) for operational risk capital may allow for regulatory arbitrage through the use of insurance. Under the SA, banks will likely have an incentive to insure recurring losses. Such insurance can meaningfully reduce…
Easing of op risk add-on boosts Commonwealth Bank
Op RWA relief offset increases due to credit, market risk
Op risk data: Chronic corruption charges cost Deutsche dear
Also: Wells Fargo fee fight; Nasdaq queers Emir reg; Covid keeps AML fines in line. Data by ORX News
Critical variables in the implementation of a risk-based internal audit: a theoretical and empirical investigation of Greek companies
This paper investigates the critical variables for the implementation of RBIA in Greek companies and examines the relationship between the above variables and RBIA implementation using data collected by 105 internal auditors, external auditors, directors…
Held in suspense: late futures orders blamed for Covid meltdown
Buy-side use of average pricing contributed to rash of failed trades and give-ups last March
Nordea CRO – a ‘controls freak’ meets Covid
Flexible checks and balances at bank's asset management arm kept risks within tolerance
Derivatives client clearer of the year: JP Morgan
Risk Awards 2021: bank avoided tech snags and margin call surprises that plagued peers during crisis
Risk innovation of the year: Credit Suisse
Risk Awards 2021: new analytics dash helped bank get ahead of op risk breaches during Covid crisis
Detection of financial fraud risk: implications for financial stability
This introduction to the Journal of Operational Risk special issue shines a light on the relationship between financial fraud risks and financial stability.
Jumbo Goldman 1MDB fine upends 2020 trend to lower losses
Financial fraud and fat fingers loom large, but annual top 10 op risk losses still show fewer fails. Data by ORX News
Deutsche Bank lines up new head of op risk
Appointment follows departure of Bakhshi to CRO role at LSEG
Op risk data: In fewer reg fines, US took its lumps in 2020
Also: Retro Russian embezzlement fines; Barclays slapped for lack of forbearance. Data by ORX News
The strange case of the Jet Airways bankruptcy: a financial structure analysis
The authors investigate the financial structure of Jet Airways, with the aim of understanding whether financial turbulence for an airline company can constitute an antecedent for predicting the risk of bankruptcy.
Risk committees: designing a horse and getting a camel?
When we examine what’s required of them, do risk committees hold water, asks ex-SEC risk oversight chief
Four in five European banks don’t model their op risks
Advanced measurement approach is the preserve of large banks
DBS chief executive on fighting tech disruptors with data
Asia Risk 25: Data and AI are top technology priorities for Singapore bank, says Piyush Gupta
Ten laws of operational risk
This paper sets out ten laws that govern the behavior of operational risk relating to the occurrence and detection/duration of events; the rapidity with which firms suffer losses; the lags in crystallization of losses; and internal and external drivers…
Quantification of regulatory capital for management of operational risk in banks: study from an emerging market economy
This paper studies the various methodologies used by an Indian bank in its operational risk management activities: these include loss database analysis, risk control self-assessment and key risk indicator (KRI) identification.
Must do better – Apac slow to curb control risk
Asia Risk 25: Even as the level of regulatory scrutiny peaks, meaningful change eludes the region’s banks
Output floor to drive Basel III capital increase at EU banks
About 40% of total Tier 1 capital surge due to limits on modelled RWAs
Is there anybody out there? Detecting operational outages from Large Value Transfer System transaction data
This paper develops a method to identify operational outages of participants in the Canadian Large Value Transfer System (LVTS).