Quantifying operational risk using expert opinions
We seem to be in the same situation now with operational risk as we were 15 years ago with credit risk, that is, a lack of data to build useful models. But this gap may be partially filled by appropriate use of expert opinions. By Christopher Hall
Operational risk databases are still too new to be of real value to most banks and even then, the data being collected usually does not contain enough information to make exposure and frequency estimates forward-looking and objective, as required under the Basel II advanced management approach.
Even though operational risk databases are being enhanced, it is unlikely that assessments will ever be accurate using only these databases. Too many operational risks – especially the material operational
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