A comprehensive and innovative look at how to protect financial institutions from operational risks
Operational risk is the risk associated with human error, systems failures, and inadequate controls and procedures in information systems or internal controls that will result in an unexpected loss. According to a recent survey, about seventy percent of banks consider operational risk as important as market or credit risks. Nearly a quarter of the same banks admit to operation-related losses of more than $1.6 million-many cases are so embarrassing that banks will not actually admit any error on their part. Firms are just beginning to develop their own operational risk management systems and they need guidance on how to do it. This book will help them identify, measure, and manage their operational risks.
Christopher Marshall (Singapore) is Associate Director of the Center for Financial Engineering at the National University of Singapore. He has written numerous articles in Risk magazine and Harvard Business School cases.
Written by an investment banker, this text presents an approach to identifying, measuring, analyzing, and managing operational exposures within a business. Beginning with the background of risk management, Marshall goes on to describe a detailed but generic methodology of the entire process of operational risk measurement and analysis. Coverage is given to what can be done to prevent, predict, mitigate, and finance these risks once discovered. Finally, a description of operational risk management in practice examines issues such as risk monitoring and reporting, capital-allocation, and performance measurement. Also included are a glossary and a description of some commonly used commercial risk management packages and services. Annotation c. Book News, Inc., Portland, OR (booknews.com)
