Patent ID: 7979298
Filing Date: 2011-07-12
Classification: G06Q

Abstract:
1. A method for modeling and quantifying operational risk in a business enterprise comprising the steps of: identifying one or more operational risks in the business enterprise, obtaining historical information on events that contribute to identified operational risks, identifying one or more business processes in the business enterprise, associating identified business processes with underlying logical and physical infrastructure and operational risks, constructing by a computer a probabilistic network model based on the business processes, underlying infrastructure and operational risks, said network comprising a taxonomy of the operational risks, each operational risk having associated functions for frequency of occurrence over a time period and duration, a topology linking each operational risk to one or more corresponding resources disrupted and consequent one or more activities disrupted, and functions for each activity identifying revenue from the activity and cost from disruption of the activity, and computing by the computer an overall potential exposure to losses in the business enterprise from the identified operational risks over said time period, wherein the computation of the potential loss exposure due to an operational risk is itself inherently inclusive of a combinatorial risk explosion; and wherein the computational method obviates the combinatorial risk explosion by constructing a filtering operation determined by setting the parameters of the input operational risks to specified material risk levels according to the tolerances of a particular institution or a class of institutions.