Regulators' operational risk definitions criticised

The lack of a common agreement on the definition of operational risk by regulators will cause serious problems for global financial institutions, said Joanna Benjamin, a consultant to law firm Clifford Chance, at a late-November seminar at the firm's Canary Wharf offices.

Benjamin pointed out that the definition used by the Basel Committee for Banking Supervision, the UK’s Financial Services Authority (FSA), and US regulators all differ in substantive ways. She also says there is no agreement among both academics and practitioners that any of the definitions are, in fact, correct. "There are serious voices questioning whether the proposed regulatory definition of operational risk in its current form coming through from Basel and the FSA is the right one," she