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.
LME had four-hour operational failure in Q4
First outage on record caused by connectivity issue at LMEmercury
Too soon to say good riddance to banks’ public enemy number one
As LockBit plans its comeback, experts say banks need a clear ransomware negotiating playbook
Driving a modern operational resilience program
Strengthen your operational resilience processes, meet pertinent regulatory requirements in this space and enhance business continuity practices with the help of high-performance GRC technology
Higher revenue pushes HSBC’s op risk up 14%
Increased net interest income over 2023 major driver behind six-year high figure
Semi-nonparametric estimation of operational risk capital with extreme loss events
The authors put forward a means to estimate value-at-risk capital during extreme loss events which combines SNP estimation with EVT-POT theory.
Beating the drum on cyber risk: the battle for boardroom attention
Delays patching financial sector vulnerabilities highlight the need for more internal clout for cyber chiefs
Estimating the probability of insurance recovery in operational risk
The authors put forward a novel methodology for the estimation of probability of insurance recovery.
Why cyber hack leaves EquiLend down but not out
Users turned to alternative securities lending platforms, but that may not mean lost market share
Op risk data: Morgan Stanley clocked in block trading shock
Also: HSBC deposit guarantee gaffe; Caixa hack cracked; reg fine insult to cyber crime injury. Data by ORX News
ING’s op risk jumps 10% on model updates
Other European AMA users report moderate hikes
Europe’s new AI Act threatens supervisory ‘chaos’ for banks
Policy-maker says new role for European Commission could collide with ECB model risk regulation
RBI’s op risk charges climb 22% on input-series update
Recalibration reverses savings from discontinuation of AMA a year earlier
Citrix Bleed hacks flag IT asset inventory shortfalls
To know what needs urgent patching, global banks first need to know what software they have
Tall order: why a unified op risk taxonomy is still elusive
Banks vary in how they classify operational risk losses – and regulators are in no rush to change the status quo
EquiLend cyber hack exposes trade reporting dependence
Ransomware attack at securities lending platform disrupts regulatory compliance
Op risk data: US piqued by Pictet tax breach
Also: US Bank’s Covid failings; South Korea’s short-selling clampdown. Data by ORX News
US climate guidance stokes debate over defining material risks
Banks welcome flexibility, but it could lead to big divergence on climate risk management
FMIs get busy, as supervisors circle
Via new roles and controls, exchanges and clearers hope to “get ahead” of regulatory wave
Bank balancing: optimising margin and capital in a higher-rate environment
This Risk.net paper, which features leading practitioner insights, assesses the challenges banks are facing in the new higher rate environment and the strategies and tools they are using to optimise margin and capital on their derivatives portfolios.
Tackling credit risk in turbulent times
In September and October, Risk.net surveyed 58 chief risk officers from a mixture of banks and insurers across the Asia-Pacific region on the credit risks they face in the current environment and how they manage them.
Will generative AI crack the code for bank tech teams?
Banks could roll out tools to help translate old – or write new – code within months
FMIs look to resilience planning to keep the lights on
Wary of customer and supervisory scrutiny, bourses are pouring resources into scenario planning and controls
Information security: too important to leave to the experts?
Holding a trove of sensitive data, FMIs seek greater safety through shared oversight and smarter reporting
Op Risk Benchmarking, round III: the FMIs
Decade of change has seen exchanges and CCPs grow in size and importance, dragging their management of op risk into the regulatory spotlight