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.
Integrating cyber risk into an operational risk framework
Risk managers should feed each level of the company only the risk information it needs
Regulators may consider portability in CCP fire drills
BoE, BaFin and CFTC move signals concern over whether client positions can be moved between banks in a crisis
A structural model for estimating losses associated with the mis-selling of retail banking products
In this paper, a structural model is presented for estimating losses associated with the mis-selling of retail banking products. It is the first paper to consider factor-based modeling for this operational/conduct risk scenario.
Cyber assault on Russian banks mirrors Swift attacks
‘Advanced persistent threat’ attacks threaten wholesale payment networks
R3 set to unveil blockchain for syndicated loan trades
Credit Suisse, US Bank and others to showcase results in March; no update on Digital Asset and JP Morgan project
Ferc manipulation definitions raise compliance fears
‘Vague’ anti-manipulation standards a source of frustration for energy firms
Operational risk and the three lines of defence in UK financial institutions: is three really the magic number?
This paper examines the three lines of defence in the context of ORM in UK financial institutions.
Stress testing under IFRS 9: a field guide
Higher volatility of loan loss provisioning will complicate financial planning and hit capital
Hidden Markov regimes in operational loss data: application to the recent financial crisis
The authors propose a method to consider business cycles in the computation of capital for operational risk.
Deutsche, Credit Suisse settle mega RMBS fines
Megan van Ooyen from SAS rounds up the top five operational risk losses for January 2017
Banks voice fresh concerns over CCP non-default losses
Dealers could face cash calls to recapitalise an ailing CCP that suffers a critical non-default loss under FSB proposals
The problems with conduct risk loss aggregation
Aggregation of conduct risk losses is recommended practice, but it can seriously distort capital calculations
Banks seek to pry open CCP black boxes
Clarity on model inputs may have averted Brexit chaos, FCMs claim
Energy firms assess costs of cyber attacks
Analytics are considered key to cyber risk management
Op risk survey shows the insidious effects of political risk
Rise in geopolitical turmoil drives other risk factors, suggests a network analysis of 2017's survey
A nonlinear analysis of operational risk events in Australian banks
This paper proposes a methodology applied to complex systems to analyze operational risk events in Australian banks.
Doubts and ambiguity remain around forex code of conduct
Customers face more responsibility for understanding dealing terms and more measures may be needed, sources say
Top 10 operational risks for 2017
Risk.net presents the top 10 operational risks of 2017, as chosen by risk practitioners
Cyber is top op risk for 2017, say CROs
This year's Top 10 Operational Risks survey highlights sharp rise in geopolitical risk following Brexit and Trump election
Hidden benefits of the Fed’s model validation push
Incidents such as the London Whale losses show an overhaul of model validation should be welcomed, not maligned
Goldman’s mortgage mis-selling fine tops 2016 op risk losses
Legal settlements with US regulators dominate the year's biggest operational risk charges
OCC fines Usher and Ramchandani $5m each in FX ‘Cartel’ probe
Former traders were indicted by the DoJ for the same offences
What lies beneath: attention lessons for risk managers
Allowing seemingly irrelevant problems to fester can lead to catastrophe