Operational risk modelling
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…
Strength in numbers
Data consortiums for loss information are popping up all over the globe. Why are they proving so popular? Duncan Wood reports
The data puddle challenge
The loss event taxonomies currently in use are inadequate. The worst problem is the lack of clarity with regard to the boundary conditions between risk event categories. Tara McLenaghen explores the issues
Standing on the threshold
A 'one distribution fits all' approach is not the best option for op risk models. Carsten Steinhoff and Rainer Baule explain why a tailor-made model is therefore vital to the accuracy of loss distribution models
How operational risk protocols can forestall disaster
Could the subprime mortgage crisis – now estimated to have cost between $50 billion and $100 billion – be the opportunity that the discipline of operational risk has been waiting for?
Banking on a more advanced approach
AMA MODELS
Risk information: science or art?
Industry experts gathered for a roundtable discussion in New York at the end of May to debate the ways firms acquire and use information about risks. Moderated by Ellen Davis
Future options
Operational risk derivatives have been touted for a few years now, but interest in them moves in waves. The current tide is high, however. Duncan Wood tests the water
The principles of distribution fitting
TECHNICAL
Room for improvement
Sungard tops our survey of software vendors, its products proving a hit across the op risk and compliance spectrum. But op risk executives continue to demand more from the software industry, reports Dianne See Morrison
KRIs: that difficult age
Key risk indicators (KRIs) were once the golden child of operational risk, but they are now in the midst of a turbulent adolescence. Peter Madigan asks whether KRIs will start to grow up in the next couple of years
A question of discipline
OR&C INTELLIGENCE – OP RISK
Harvesting loss data
Although often the core of Basel II models, loss event data is usually less robust than op risk executives would like. Peter Madigan explores the challenges around collection, clearing and enrichment
Two heads are better than one
Glenn Christensen of Synovus Financial Corp. introduces an enterprise risk management strategy known as the Bifurcated ERM Methodology
GRC - the hot new operational risk product
MEASUREMENT
Resolving the confusion
Risk control self-assessments have become a Tower of Babel for the op risk discipline, with a variety of different approaches being taken. Ellen Davis reports
Time for change
Implementation of the core principles of op risk still has a long way to go in the Asia-Pacific region. Ellen Davis reports
Event horizon
Rick Cech takes a second look at what makes up operational risk event types, and asks if there is a more advanced way to define them