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Operational Risk : The New Challenge for Banks - Gerrit Jan van den Brink

Operational Risk

The New Challenge for Banks

Hardcover

Published: 16th October 2001
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Operational risk is one of the oldest risks in the banking sector, and yet regulatory bodies including the Basle Committee are still working on a regulatory framework. Damage control measures introduced by banks have often proved ineffective. The successful management of operational risk will be a significant competitive advantage for banks in the future. This book is a practical guide to achieving control of operational risk. Using qualitative analysis, the author suggests risk identification procedures and provides tools for the analysis, quantification, and management of risk. He goes on to discuss future developments in both the regulatory and insurance sectors, including the most recent Basle Committee proposals.

List of Tablesp. ix
List of Figuresp. x
Acknowledgementsp. xi
Introductionp. xiii
Definition and Dimensions of Operational Riskp. 1
Definition and classification of riskp. 1
Dimensions of operational riskp. 5
The risksp. 5
Elements of operational risk controlp. 13
Integration of operational risk in bank managementp. 14
Risk Identification and Quantificationp. 21
The awareness processp. 21
Self-diagnosisp. 21
Information needed for the quick-scan processp. 22
Results of the quick scanp. 39
Self-diagnosis stepsp. 40
Use of the questionnairep. 42
The internal audit department's rolep. 43
Operational auditp. 44
The value of operational audit reports for diagnostic purposesp. 45
Quantification of operational riskp. 45
Quantification methods usedp. 47
An intermezzo: the adviser's riskp. 69
Capital allocationp. 73
A top-down approach for capital allocationp. 77
The internal risk capital marketp. 78
Management of Operational Riskp. 80
Introduction to operational risk managementp. 80
The regulatory environmentp. 82
[section]25a of the German Banking Act (KWG)p. 83
The toolkitp. 86
Introduction to the use of the toolkitp. 86
The contents of the toolkitp. 86
The implementation of a control environmentp. 87
Knowledge managementp. 89
Policies and proceduresp. 95
Segregation of dutiesp. 95
Dual controlp. 97
Proxy instructionp. 98
Confirmationsp. 98
Reconciliationsp. 99
Plausibility checksp. 101
Determination and control of counterparty and trading limitsp. 101
Inventory checkp. 102
Implementation of an independent internal control functionp. 102
Control measures to guarantee error-free IT processingp. 103
Recruitment of reliable personnelp. 109
Conclusionp. 109
Risk transferp. 109
Management informationp. 115
Future trendsp. 116
Concluding Remarksp. 118
Operational Risk: Diagnosisp. 120
Operational Risk: Error Treesp. 135
Transaction Volumep. 137
Loss Factor Categorizationp. 144
Notesp. 151
Referencesp. 153
Indexp. 155
Table of Contents provided by Syndetics. All Rights Reserved.

ISBN: 9780333968680
ISBN-10: 0333968689
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 156
Published: 16th October 2001
Publisher: Palgrave Macmillan
Country of Publication: GB
Dimensions (cm): 21.6 x 14.0  x 1.27
Weight (kg): 0.38
Edition Number: 1