Operational Risk Management: A Complete Guide to a Successful Operational Risk Framework
Previous definitions of operational risk took the view that if the risk was not captured in market or credit risk programs, then it must be operational. Today, a more concrete definition has been established—the most common of which can be found in the Basel II regulations: "Operational risk is defined as the risk of loss resulting from inadequate or failed processes, people, and systems or from external events."As operational risk management programs continue to grow in financial firms around the world, so does the need for information on identifying and managing key operational risks, as well as implementing an effective operational risk framework. Nobody is more familiar with this situation than author Philippa Girling—an operational risk expert, who was named one of the "top 50 faces of operational risk" byOperational Risk and Regulationmagazine. Now, inOperational Risk Management, she shares her extensive experience in this field with you.Engaging and accessible, this reliable resource provides both aspiring and experienced operational risk professionals with the tools and best practices they'll need to excel at this endeavor, and shows them what it takes to successfully implement an operational risk framework in their firm. The proposed framework provides practical steps to ensure effective identification, assessment, monitoring, and mitigation of operational risks.Along the way, Girling outlines the essential elements of this discipline, including the foundations of the framework-governance and risk appetite, the building blocks of data collection; and the final capstones of calculating capital and reporting. She also takes the time to address other important issues you should be aware of, such as reputational risk, and convergence, which is also known as governance risk and compliance (GRC).Operational Risk Managementalso provides valuable insights into some of the more notorious operational risk events that have occurred in the past ten years. Cases covered range from the JPMorgan "London Whale" case and the UBS unauthorized trading scandal to the costly Knight Capital technology glitch. And a companion website contains links to all of the reference materials in this book, an informative operational risk toolbox, and teaching slides.Operational risk impacts organizations of all sizes and industries, including the financial services industry. The methods and tools needed to face this challenge head-on are available, and this book will put you in a better position to understand and implement them.