What Is an Operational Risk?

Operational risk refers to the risk of accidental losses due to defects in information systems or internal controls. The causes of operational risks include: human error, computer system failure, improper working procedures and internal controls, and so on. ^[1]

Operational risk

The British Banker Association (BBA, 1997) first gave the definition of operational risk. They believed that operational risk is related to human error, incomplete program control, fraud and criminal activities.

In many financial institutions, the losses caused by operational risks have been significantly greater than market risks and credit risks. Therefore, the international financial community and regulatory organizations have begun to focus on the exploration and construction of operational risk management technologies, methods, and organizational frameworks, and significant progress has been made. However, from the perspective of the domestic banking industry, the understanding and management of operational risks remain at a relatively superficial level. The focus of regulatory authorities has been positioned in the field of credit risk, and regulatory resources are too lean

I. Type:

Internal fraud

Fraud and misappropriation involving internal personnel

Anna Chernobyl

Ph.D., Associate Professor of Finance, Martin Whitman School of Management, Syracuse University, New York, USA. Its research focus is on operational risk management.

Svetloza Wittoff

PhD, Germany

Chapter 1. Operational Risks Are More Than "Other" Risks

Chapter 2. Operational Risks: Definitions, Classifications, and Their Position Among Other Risks

Chapter 3 New Basel Capital Accord

Chapter 4 Major Challenges in Operational Risk Modeling

Chapter 5 Frequency Distribution

Chapter 6 Loss Distribution

Chapter 7 -Stable Distribution

Chapter 8 Extreme Value Theory

Chapter 9 Censored Distribution

Chapter 10 Goodness of Fit Test