By the term operational risk (also operational risk called) all operational risks are understood, which can cause a damage in an enterprise. This term is from special interest however in the bank nature, where it won in the last years due to the own capital funds guidelines Basel II at meaning.

In the context of Basel II apart from the credit risk and the market risk also the operational risk is consulted for the first time for the computation of necessary own capital funds.

Definition of operational risks

The Basler committee for state supervision of the banks defines the operational risk as "„the danger of losses, which occur consequence of the inadequacy or the failure of internal procedures, humans and systems or consequence of external events. This definition includes right risks, contain however not strategic risks or Reputationsrisiken. "“

Losses of the category "“humans"” are damage, which is deliberately caused by coworkers of an enterprise (among them to fall all fraud cases). Losses of coworkers, who are not deliberately added, are to the category "“internal procedures"”, also "“processes"” mentioned and assigned. Examples of it are transaction errors and errors caused by misunderstandings. Under "“external events"” failure of the infrastructure is, natural catastrophes and would amount to summarized by external persons (e.g. armed robberies).

We must see operating result which can be expected under operational risk an exactly definable negative deviation from the actually realized operating result compared with that.

The European commission however goes an opposite way. By the negative definition its which operational risks are not, are these to become recognizable. Already well-known risks are summed up and the not explainable difference operational risk is called.

TOTAL RISK

• - Market risk
• - Credit risk
• - Liquidity risk
• - Right risk
• = operational risk (3)

The corresponds to the operational risk.

Examples

One of the most spectacular cases of operational risk is the case nods Leeson, which was active as dealers for the Barings bank. One of the principal reasons for the unbelievably high damage of 1.2 billion EUR was the circumstance that nod Leeson both for the completion of security business and the Backoffice was responsible. By the management comprehensive liberties were granted by its initial large successes to it and without a more exact examination of the procedures in its business surrounding field also after the first referring to losses, did.

Demarcation to the credit risk

The demarcation to other kinds of risk can be very provocative. The most frequently occurring overlap concerns operational risks in the credit risk. That means that by an operational risk a credit loss came. This can take place by means of coworker (e.g. error with the documentation, assignment from credits not existente customers for the own advantage) in addition, with customer (collecting main of falsified content confirmations).

Methods of the operational risk management

The Basler committee for state supervision of the banks gives the rather general demand: "„The state supervision of the banks authorities must make sure that the banks have internal controls, which and range of their business are appropriate for the kind. In addition exact regulations for delegating powers and competencies, the separation of the functions, those belong entering obligations for the bank, which having funds and the rendering of account concern over their active and liabilities, the tuning of these functions, the safety device of the active as well as appropriate independent internal and external revision and Compliance functions to the examination of these regulations"…."“(1)

More particularly this default in the sentence is seized: "„The supervisory authorities should make certain that the management provides for effective internal control and appeal proceedings. In addition business-political principles for the handling or reduction of the operating risk should be set up. The state supervision of the banks authorities should make sure that the banks have adequate and better-rehearsed plans for the resumption of the enterprise of all important EDP systems, with opportunities of evasion at another place, in order to be prepared against operational disturbances. "“(2)

Measuring beginnings for operational risk (to Basel II)

Finally the operational risk is reflected II to Basel with the computation of the minimum capital requirements in a number again, which states as exactly as possible the relationship of profit and risk. For the determination of this number there are different measuring beginnings, which are defined as far as possible by Basel II. The different measuring beginnings for the operational risk rise in your progressiveness and complexity in nominal sequence: Basis indicator beginning, standard beginning and advanced measuring beginning (AMA). While for the basis indicator beginning a number is intended for the entire company, can be differentiated with the standard beginning nevertheless according to different divisions and according to adapted risk weights. For both beginnings calculation formulas are already given in the Baseler own capital funds agreement. The AMA however, lets a large clearance their operational risks determine to the credit institutes on the basis own measuring procedures. Further it is to be combined possible the standard beginning with the AMA. Both for the standard beginning and for the AMA there is a requirement catalog, whose requirements must be converted around the respective measuring beginning to use at least to be allowed due to the flexibility of both measuring beginnings, in each case.

Literature

• Basler committee for state supervision of the banks (2003): Sound Practices for the management and supervision OF operational Risk (dt.: Management of operational risks - practice recommendations for banks and state supervision of the banks
• Buhr, R. (2000): Measurement of operating risks - a methodical beginning, in: The bank, number 3, P. 2002 FF.
• Risk management Group (2000): OTHER Risks, Discussion PAPER in http:/www.sib.co.uk (OTHER risks)
• A house, Christian (2002): Operational risks - bases of the current discussion, in: The savings bank, 119 Jg., number 11, November 2002, P. 488 - 490.
• Austrian central bank/supervision of financial market (2005): Management of the operational risk
• Schierenbeck, H. (2001): Yield-oriented bank management volume 2: Risk Controlling and integrated net yield/risk price increase, 7. Edition, Wiesbaden

See also: Bank operating teachings, Basel II, credit risk, market risk

Related links

• The Framework for appropriate capital resources - better admits than Basel II
• Basel Accord

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