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 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
Top 10 op risks: AI arms race leaves risk teams playing catch-up
As firms invest for fear of being left behind, op risk managers urge caution on data, controls and access
CFTC’s Doge-inspired drive to enforcement may fall short
Lawyers doubt guidance on rewards for self-reporting goes far enough
Top 10 op risks: Why cyber risk looms larger than its losses
Fast-moving threat landscape and increased supplier concentration keep infosec top of the table
Top 10 op risks: For change management, the cloud is its own weather front
As lenders move legacy banking to the cloud, the risks of getting it wrong are exponentially greater
Top 10 operational risks for 2025
The biggest op risks as chosen by senior practitioners – and what they’re doing about them
Top 10 op risks: cyber still top, but change management surges
AI-enhanced threats permeate this year’s top operational risks for financial firms, from infosec to geopolitics
Santander’s operational, securitisation RWAs hit new highs
Record rise in op risk comes before Basel III implementation
Enhancing organizational sustainability through human resource analytics: examining the moderating effect of organizational culture
Focussing on information-technology-based organizations, the authors investigate links between human resources analytics and organizational sustainability, finding HR analytics to enhance organizational sustainability.
Op risk data: Crypto hack bites Bybit; fat-finger flurry at Citi
Also: OKX gets AML scold, UK motor finance fiasco revs up. Data by ORX News
CFTC aims to settle enforcement cases within 30 days
Remediation initiative accompanies new effort to slash penalties for technical violations
Asset and liability management: the nerve centre of modern banks
Regulatory and compliance mandates can be complex and challenging. Therefore, a multiple-view approach to ALM, regulations and finance within the organisation, is key
Operational risk, capital regulation and model risk
The author proposes seven basic properties for operational risk modelling to form an operational risk management framework.
The robot-labeling phenomenon: robot-ready modern operational risk management
The author highlights misuse of the term "robot" in banking practice and the literature, proposes the robot-labelling phenomenon and recommends a shift in approaches to operational risk management to address challenges of the synthetic era.
Banks urged to track vendor AI use, before it’s too late
Veteran third-party risk manager says contract terms and exit plans are crucial safeguards
Basel uniformity fades as members defy dress code
Rule-makers diverge from Basel III standards, denting aims of comparability and fuelling fears over fair competition
Start planning for post-quantum risks now
Next-gen quantum computers will require all financial firms to replace the cryptography that underpins cyber defences, writes fintech expert
Op risk data: Two Sigma pays the price for model mess
Also: KuCoin’s AML fail, Angola bribes bite Trafigura, and Trump’s green scepticism. Data by ORX News
Annual update ratchets up op RWAs at European banks
DNB, RBI and Swedbank post double-digit RWA rises for second year running ahead of Basel III implementation