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.
Banks less stressed about CCAR
Fed’s 2017 stress test assumes 10% peak unemployment and sharp drop in commercial property prices
Corlytics: data reveals least-predictable regulators
Regtech start-up says NY watchdog’s record has prompted banks to retreat
Basel opts for aggregate bank capital output floor
Banks will have more flexibility on use of internal models, but calibration still undecided
Memo to bank CEOs: treat op risk with more respect
High-profile critics of op risk capital rules are misguided, say Ariane Chapelle and Evan Sekeris
Dexia faces fraud charges over ‘hidden costs’ in swaps deal
Italian fraud trial could spell trouble for other banks providing municipal swaps contracts
Cluster model relies on op risk ‘storms’
Capital models should reflect loss grouping – research
Regulators told to play greater role in cyber security
Companies can’t battle threats on their own, CFTC told
Bank scandals suggest cultural problems are industry-wide
Libor-rigging and similar misconduct across multiple firms may be the result of 'macro-cultures'
Nickel-and-Dimon: why bank CEOs loathe op risk capital
JP Morgan’s Jamie Dimon and ex-StanChart CEO Peter Sands are no fans of the RWA approach
Operational Risk Awards 2017: call for entries
Practitioners, vendors and service providers invited to enter by the end of April
Mortgage and auto loan securitisations inflict op risk losses
Megan van Ooyen from SAS rounds up the top five operational risk losses for March 2017
Model risk managers eye benefits of machine learning
Ramp-up in regulatory scrutiny of model validation sees banks turn to black boxes
Spike in bad loans raises scrutiny of P2P credit models
Jump in delinquencies at some lenders prompts questions over modelling practices, but firms stand by their approach
Regulatory blitz weakening model risk management, say banks
Smaller banks’ modelling practices under growing scrutiny, but ability to comply is stretched
Scrap ‘absurd’ op risk RWA framework, says Sands
Ex-StanChart chief exec advocates replacing current op risk capital framework with regulator-set buffer
Banks rush to protect against data breach fines
Cost of implementing GDPR ‘could reach hundreds of millions’ for largest banks
Buy side may have to take on CCP losses – FSB’s König
Exempting ailing banks from CCP wind-up process could force wider allocation of losses
Survey: CTRM system upgrades fail to impress
Commodity trading and risk management software moves to the cloud, but experts urge caution
New Basel delay throws SMA into doubt
Revised op risk capital framework unlikely to be implemented uniformly, even when a deal is agreed, bankers say
DTCC’s Bodson criticises ‘dumb-ass’ cyber risk rules
Requirement to recover from cyber attack within two hours unrealistic, he says
Top five op risk losses: Mortgage fines continue to plague banks
Megan van Ooyen from SAS rounds up the top five operational risk losses for February 2017
Dodd-Frank rollback targets asset manager stress tests
Amended Financial Choice Act eliminates stress tests for funds, lobbyist claims
Integrating cyber risk into an operational risk framework
Risk managers should feed each level of the company only the risk information it needs
Regulators may consider portability in CCP fire drills
BoE, BaFin and CFTC move signals concern over whether client positions can be moved between banks in a crisis