How To Manage Effectively Operational Risk For Basel II, Solvency II And Arrow
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(0)Overview: Operational risk exists everywhere in the business environment. It is the oldest risk facing any commercial institution and in particular banks, insurance companies, and other financial institutions. Any financial institution will face operational risk long before it decides on its first market trade or credit transaction. Of all the different types of risks financial institutions face, operational risk can be the most devastating and at the same time, the most difficult to anticipate. Its appearance can result in sudden and dramatic reductions in the value of a firm. Operational risk cannot be managed successfully with a few spreadsheets or databases developed by an internal risk management department. In fact, one of the biggest mistakes an institution can make is to rely on simplistic and traditional solutions, which can lead to less than ideal choices about managing operational risk. Organizations should efficiently meet and adapt to internal operational risk practices as well as external regulations such as: Basel II, Solvency II, FSA mandates, and others by automating and simplifying the process of collecting, storing, analyzing, tracking, and reporting on information relevant to operational losses, risk and control assessments, definition, and management of key risk indicators and scenarios.
