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.
Basel II to help community banks manage op risk
Cover story
Technology briefs
Technology
Isda calls for trade automation
Implementation Outlook
No industry consensus on op risk spending for 2004
Spending on operational risk management software looks set to grow in 2004 compared with last year, but will not reach its peak for another year or two.
Regulators' operational risk definitions criticised
The lack of a common agreement on the definition of operational risk by regulators will cause serious problems for global financial institutions, said Joanna Benjamin, a consultant to law firm Clifford Chance, at a late-November seminar at the firm's…
Bank of England publishes operational contingencies report
The Bank of England yesterday published an eagerly awaited report on how the government would handle a disaster striking the financial sector, such as a terrorist bombing.
Insurers must do better - FSA
A new study by the UK's Financial Services Authority into risk management at insurance firms concludes that, although practices are improving in general, there is a long way to go before insurers are at the same standard as other types of financial…
Operational and market risks of a regulated power utility
Victor Dvortsov and Ken Dragoon present an analytical method for including market and operational risks when estimating utility portfolio value-at-risk
Measuring operational risk: a reality check
In the second of two articles on operational risk, Mark Holmes looks at the measurement issues involved, taking a constructively critical look at the ideas currently in vogue.
Rumbles in the ratings jungle
Things are astir in the ratings jungle. Moody's published a paper earlier this year detailing a specific approach to assessing operational risk. Fitch will shortly be devoting a separate section of its rating reports to op risk. And Standard & Poor's,…
Reuters enters the op risk software market
NEW YORK - Reuters is the newest player in the op risk software field. The global information technology company is preparing to launch an as-yet-unnamed op risk software solution in the next two months, says Julian Fisher, head of operational risk at…
Op risk still at an early stage, says FSA
Operational risk remains at an early stage of development compared with other areas of risk management, a review by the Financial Services Authority (FSA), the UK regulator, has found.
Hong Kong to adopt loose approach to Basel II
The Hong Kong Monetary Authority, the financial regulator for the special administrative region of China, will not be mandating that certain types of banks adopt certain portions of the revised Basel Accords, according to a speech by Simon Toping,…
US regulators issue their advance notice of proposed rulemaking
US regulators published the much-awaited advance notice of proposed rulemaking (ANPR) late on Friday afternoon, after a meeting of the Board of Governors of the Federal Reserve.
Running a smooth operation
Technology
Firms rise to the op risk data management challenge
NEW YORK - Like all risk management problems, operational risk relies on a sufficient supply of good quality data if analysis is to be meaningful and decision-making effective.
CP3 Comment: Why be standardised?
It seems such a short time ago that we were building a new capital Accord, which would incentivise banks to improve their risk management and encourage them to move along the spectrum of the new Accord's three stages. How rapidly things can change.
Operational risk: a practitioner's view
The Basel Committee on Banking Supervision ("the Committee") released aconsultative document that included a regulatory capital charge for operationalrisk. Since the release of the document, the complexity of the concept of "operationalrisk" has led to…
Framework developed for German banks
BONN, GERMANY - Many of Germany's banks have been somewhat slow to prepare their operational risk management framework for the new international bank capital accord, Basel II, and the prospective European Union (EU) Capital Adequacy Directive (Cad).
Exceptional operational risks: Three myths debunked
Are there common features among exceptional operational risks beyond their defining characteristics of rarity and severe consequences?
Advancing op risk management using Japanese banking experience
Junji Hiwatashi and Hiroshi Ashida of the Bank of Japan outline a practical framework for operational risk management, derived from research and experiences in Japan's financial community.
CLS settles a trillion a day
NEW YORK — Continuous Linked Settlement, the new settlement service for foreign exchange, settled a record $1 trillion in FX payments on February 18.