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 bigger picture

In 2003, rating agencies considered operational risk as a separate risk category, but quantification problems have prompted them to take an integrated, enterprise risk management approach.

The online frontier

2007 has been a year of online activism and banks have paid the price. Is there an emerging reputational risk threat posed by bloggers and discussion forums? Peter Madigan investigates

Does Basel II add up?

Are there inconsistencies in the standardised and advanced measurement approaches of the Basel II regulatory framework? Andreas Jobst considers the evidence

What's happening at JP Morgan Chase?

Recently, many have come forward to ask me what is going on within JP Morgan Chase's risk management division. Over the past year, a number of people have left the operational risk team, both at the corporate and business unit levels. Risk executives in…

A calculated approach

Operational risk economic capital calculation is high on the agenda - at last. So who is using it, and why? A new OR&C Intelligence survey investigates

Time to shine

In the wake of the subprime crisis and resulting global credit crunch, operational risk practitioners must seize the opportunity to prove the value of their discipline, says Ellen Davis

Doing the groundwork

The start of Reg NMS's pilot phase in July may have led compliance teams at brokerages to believe most of their work is done. But, as Peter Madigan explains, things are just getting started

The only way is up

Until now, op risk and compliance professionals have not been as well remunerated as their counterparts in other risk disciplines. However, with increased demand for those with the right skills, this looks set to change. Peter Madigan reports

A tough balancing act

The Office of the Comptroller of the Currency, under the watchful eye of deputy comptroller Kevin Bailey, is moving ahead with its Basel II policy. Victoria Pennington reports

Measures for measures

Consistent quantitative operational risk measurement is vital to the health of banks and financial institutions. Andreas Jobst offers guidance on enhanced market practice and risk measurement standards

A narrowing gulf

Many Middle Eastern nations are keen to implement Basel II, and larger banks have been stepping up efforts to develop an op risk framework. But smaller banks are being hindered by a shortage of resources and experienced staff, as Victoria Pennington…

Subprime crisis shows why firms need ORM

It's hard to not be a bit worried by the subprime crisis and the spin-off events that have cascaded through the financial markets over the past few weeks. And it is ironic that the crisis kicked off in the US, where regulators have made such an unholy…

The urge to converge

Convergence is a clear goal for many in the industry, but uniform implementation is proving tricky, finds the latest survey from OpRisk & Compliance and Ernst & Young

Keeping the wheels turning

When confronted with business continuity issues, energy giant E.ON used to turn to a printed manual. Now it has introduced a constantly evolving system to deal with BCP challenges. Duncan Wood investigates

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