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.
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
The risk information challenge: Bringing technology to bear
A roundtable discussion hosted by OpRisk&Compliance and sponsored by BearingPoint explored the difficulties around obtaining robust risk information and disseminating intelligence back into the organisation. Moderated by Ellen Davis
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
Banks must review their advanced measurement approach models if they are to experience a smooth transition under the new Basel II regime. By Thomas Kaiser, of consultants KPMG
Batting for British banks
Angela Knight, chairperson of the British Bankers' Association, talks to Nick Kochan about her hard-earned reputation as the scourge of the international regulatory community
Bringing down the house
There is evidence to support the claim that the subprime mortgage crisis in the US may have had its roots in operational risk problems. But just what caused the crisis, and could it have been averted if the firms involved had robust op risk frameworks in…
In the line of fire
In the global fight against money laundering, financial institutions are developing various hi-tech weapons. Peter Madigan reports
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
The trouble with GRC
Governance, risk and compliance is posing thorny challenges for many executives
Op risk can learn from Berlin's renaissance
I was in Berlin in June at a conference on business processes. Now, some people might think this is probably not how they would choose to spend their time. But the event was something of a revelation to me.
Belgian companies club together for op risk guide
Five Belgian financial services providers have partnered with PricewaterhouseCoopers to release a set of guidelines for measuring operational risk management.
New report blames op risk failures for sub-prime meltdown
Op risk: a culprit in sub-prime mortgage crisis
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
Defining the boundaries
PROFILE: HIM CHUAN LIM
The principles of distribution fitting
TECHNICAL
What to do with the treasure we've found?
This month, I've quite literally been around the world checking on the state of the operational risk industry. From my base in London, I've been to our conferences in both Singapore and New York.
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
Decoding the data
With less than six months to go before Mifid takes effect, banks need to address the data-storage and management requirements they will face. Duncan Wood reports
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
From small acorns...
In the third of a series, Eric Holmquist considers some practical steps to building a better risk culture