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.
The role of banks’ digital transformation in operational risk management: evidence from China
The authors investigate the impact of banks' digital transformation on operational risk, finding that in most cases, this reduces operational risk,
Risk managers say second line needs to identify its value-added
Risk Live: Risk functions must see themselves as problem-solvers, but first line should share responsibility
Regulators urged to use Dora reporting to track systemic risk
Risk Live: Bankers and regulator say governance requirements for new rules are complex to implement
EU tipped to tag less than 30 tech firms as critical for Dora
Irish regulator suggests European supervisors will take narrower view than some feared
Passing the port? Drill needs more CCP hands in key test
As few plan to test porting, brokers say finer asset segregation, reg waivers and capital relief would help
CME suffers longest op failures in seven years
Outages totalled over 13 hours in 12-month period
Why AI-enhanced risk management is vital for open finance
In bank-fintech partnerships, AI can be both a source of operational risk and a solution to it
Op risk data: Rates bait and switch incurs Capital One punishment
Also: Crypto firms suffer cyber setbacks, Umpqua in Ponzi play, and QSuper premium palaver. Data by ORX News
NY Fed Home Loans Bank spurns multi-cloud model
Cost and complexity of diversifying away from big three providers outweigh concentration risks
SEC faces debate over possible cull of cyber security rules
Lobby groups pushing for regulator to roll back disclosures, but investors take a different view
FMIs create culture club for op risk
Exchanges and clearing houses seek to build risk resilience among front-line business, amid concerns of overreliance on second line of defence
Are EU banks buying cloud from Lidl’s middle aisle?
As European banks seek to diversify from US cloud hyperscalers, a supermarket group is becoming an unlikely new supplier
Taking the sting out: exchanges and CCPs bolster scenario toolkits
As cyber threats ramp up, the world’s largest exchanges re-assume the worst
Why US banks are not taking their eye off reputational risk
The concept may be removed from supervisory exams, but the 2023 crisis showed the risk is real
Newcomer of the year: Eleox
Energy Risk Awards 2025: Six energy titans collaborate to transform post-trade landscape
Op Risk Benchmarking 2025: the FMIs
Exchanges and CCPs respond to regulatory scrutiny and evolving threats with tighter vendor management and scenario refreshes
EU banks want the cloud closer to home amid tariff wars
Fears over US executive orders prompt new approaches to critical third-party risk management
Op risk data: BofA biffed for $540m over insurance fund swerve
Also: Suspected French Ponzi, Banco Itaú’s overcharging kerfuffle, and power outage in Iberia. Data by ORX News
Basel III overhaul adds €85bn to EU banks’ op RWAs
BNP Paribas, Soc Gen and SEB see largest rises in absolute terms
Vendor oversight splinters across FMIs
Op Risk Benchmarking: firms grapple with “chaos” of third-party rule changes, amid growing recognition of cyber and resilience threats
Basel III switch sends BNP Paribas’s op risk charges up 60%
Blow-up follows shelving of AMA model previously underpinning over two-thirds of op RWAs
Cyber insurance costs expected to rise as loss ratios worsen
Recent ransomware and tech failure events could feed through into higher premiums this year
Op risk data: Luna crypto chicanery shrinks Galaxy coffers
Also: Down under and dirty – motor finance scandal comes to Oz, and 2024 in review. Data by ORX News
EMS vendors address FX options workflow bottlenecks
Vol jump drives more buy-side interest in automating exercises and allocations