|
|
| |
Overview : |
| |
Today’s banks are under ever increasing pressure to improve financial performance, especially given the impact of the burst of the mortgage bubble in the US. Financial institutions are feeling the impact of this disruption, and need to look for ways to create efficiency while managing risk and compliance. As a result, there is much concern in the market about the management of operational risk.
Operational risk can be defined as the risk associated with a direct or indirect financial loss due to various reasons, such as: inadequate internal controls, policies and/or procedures; failure to comply with government regulations; systems failures; fraud; human error; and external catastrophes. Operational risk comes in many forms. One form of operational risk, reputation risk has an additional associated risk, in the risk of customer information being compromised in financial transactions. In today's economic climate, this is an unacceptable risk for most financial institutions.
Losses due to operational failures must be calculated and computed as part of a large financial institution’s future capital requirements. This is a cost against profitability, because capital sitting in reserve is capital not used and leveraged in profit-making activity. Download this whitepaper to learn why operation risks have become a larger share of total risk and how you can guard against it.
|
|
