Measuring and managing market, credit and Op risk [111]

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Bullet points include: Operational risk akin to ‘manufacturing processes’ that just happen to be operated by the firm Operations Research has developed extensive set of tools that can be applied to such problems E.g. ‘machine’ with a set of components, each subject to a risk of failure Model time or duration until failure, tau, by supposing that it has a distribution F with density f ‘Time to failure’ also important for credit risk Although operational risk generally endogenous whilst credit risk is generally exogenous (except perhaps for intra-group or outsourcing exposures)

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