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Journal of Financial Services Research

, Volume 56, Issue 1, pp 73–93 | Cite as

Operational Risk and Risk Management Quality: Evidence from U.S. Bank Holding Companies

  • Azamat Abdymomunov
  • Atanas MihovEmail author
Article

Abstract

This study documents the association between the quality of risk management practices and operational losses at large U.S. financial institutions. Using detailed supervisory data, we find that companies with weak risk management practices experience higher and more volatile operational losses. We also present evidence that the strength of risk management practices prior to the 2008–2009 Financial Crisis has explanatory power over losses during the crisis period. Our analysis provides new evidence of the importance of risk management practices for curtailing risk at financial institutions.

Keywords

Financial institutions Operational risk Risk management Financial crisis 

JEL Classification

G20 G21 

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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Quantitative Supervision & Research GroupFederal Reserve Bank of RichmondRichmondUSA
  2. 2.CharlotteUSA

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