The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Time for some fine-tuning

One of the biggest talking points in the Basel accord is the proposed charge for operational risk. But devising a system for monitoring and measuring operational risk that is subject to external review presents quite a challenge.

       
Ian Linnell

One of the biggest talking points in the Basel document is the proposed charge for operational risk. This broad concept is usually defined as the risk of losses stemming from processes, systems, external events and human failure. That seems to cover just about every loss known to humanity, so it is no easy matter to measure - let alone manage - operational risk.


But perhaps surprisingly, a number of banks have already put into place methods for quantifying this risk and set aside capital to cover it. "Some banks are allocating an element of capital for operational risk," says PricewaterhouseCoopers partner John Tattersall. "But their systems for measuring losses and anticipating amounts at risk tend not to be very robust. Devising a system for monitoring and measuring operational risk that is subject to external review will be quite a challenge."


The proposals explain how the basic operational risk charge will work.



You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree