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.
Monthly op risk losses: China bond fraud implicates leading banks
Breakdown of top five loss events. Data by ORX News
Review of 2017: All sorts of volatility, bar one
Markets were oddly calm this year, while everything else was in motion
Swift’s CRO on Bangladesh Bank heist, cyber risk and DLT
Quraishi lays out Swift’s approach to members’ security, and technological risks and opportunities
1MDB looms large in Asian banks’ war on money laundering
Banks in Asia-Pacific spurred by tougher enforcement and stricter AML rules
Apac banks dodge op risk capital hit from new rules
Chinese lenders have largest capital requirements in region; banks expect muted increase on average
Monthly op risk losses: NYDFS fines Credit Suisse for forex fails
Breakdown of top five loss events, plus conduct risk and robo-advising. Data by ORX News
Basel III: final op risk framework leaves banks guessing
Analysis suggests big capital savings on average, but uncertainty persists over uneven implementation
Basel III changes set to create big winners and losers
Capital hit for G-Sibs ranges from 28% drop to 43% jump, QIS reveals
Banks await Basel decision on legacy op risk losses
European banks could see big jump in capital if losses from legacy businesses are included in SMA
Carney: conduct risk failings could spark capital add-ons
Senior Managers Regime is helping BoE identify cultural weaknesses at individual firms, says governor
Standardized measurement approach extension to integrate insurance deduction into operational risk capital requirement
The SMA proposed in BCBS (2016) presents several issues: in particular, its two components are not sufficient to discriminate banking institutions by risk profile, thus penalizing the more virtuous ones. This paper describes a possible solution to extend…
How to save op risk modelling
Drop loss categories and correlations and adopt simple loss distribution, advises AMA expert
Russian crypto-currency will threaten AML efforts
Targeting individuals and companies could be impossible with digital currency, write academics
ETFs under scrutiny over liquidity risk
Secondary market trading in funds could freeze up in times of stress, supervisors fear
JP Morgan’s CRO on the bank’s six buckets of risk
Risk30: From loan losses to electromagnetic pulses, JPMorgan Chase has a place for it
Monthly op risk losses: Aussie banks settle rate rigging claims
Breakdown of top five loss events, plus insight on $7bn US consumer protection fines. Data by ORX News
Bridgewater’s Murray on radical transparency and op risk
Risk30 profile: “People think we’re crazy,” says giant fund’s co-CEO of its unique approach to op risk
The future of risk in 10 interviews: volatility, liquidity and tech
Fed’s Powell, JP Morgan CRO, Bridgewater co-CEO all feature in upcoming profiles
Banks prepare for battle with Fed over G-Sib rules
Proposals would kill client clearing business, FCMs claim – but postponement is a chance to fight back
The three lines of defence: a Sisyphean labour?
Banks have revised Basel’s model to suit their risk profile, but some remain sceptical of its impact on risk culture
Citi overhauls bonus system to strengthen conduct culture
Poor conduct score can eliminate bonus regardless of profit contribution
Swaptions expiries complicate portfolio optimisation runs
triBalance and Quantile users call for better post-trade co-ordination between dealers
Cyber risk a top threat for energy firms
Cyber crime cited among top three external risks; scarce data makes modelling difficult
US Treasury hands CCP resolution powers to FDIC
Mnuchin regulatory review explicitly refers to FDIC as receiver under a Title II resolution