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ERM Frameworks and Responses to risk [32]

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Bullet points include: Defined in Basel II as: “the risk of losses resulting from inadequate or failed internal processes / people / systems or from external events” includes legal risk, fraud, IT failures, transaction settlement errors, litigation, flooding, fire, terrorism excludes strategic risk, reputational risk, bad M&A decisions / business launches Operational risk generally seen as having no upside, only downside Depends on internal characteristics of bank, e.g. culture, processes Sophistication of modelling varies considerably between banks

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