Abstract
The working definition of “operational risk” among financial institutions is the risk of loss from inadequate or failed internal processes, people, and systems or from external events.1 Practically speaking, operational risk is the risk of loss from problems such as human error, system failures, and bad weather—to name a few of the many almost-inherent business complications that qualify as operational risks. Operational risk is just a relatively new term for some very old risks like fraud and embezzlement, and some newer risks like cybercrime and computer system failures.
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Notes
See Michael Lewis, Flash Boys (New York: W.W. Norton, 2014).
See Christopher Marshall, Measuring and Managing Operational Risks in Financial Institutions: Tools, Techniques, and other Resources (Singapore: John Wiley & Sons, 2001), 81.
See David J. Cummins, Christopher M. Lewis, and Ran Wei, “The Market Value Impact of Operational Loss Events for US Banks and Insurers,” Journal of Banking & Finance 30, no. 10 (2006): 2605–34.
Both Marshall and another author who has written on operational risk management, Gerrit Jan van den Brink (Operational Risk: The New Challenge for Banks [New York: Palgrave, 2002])
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© 2016 Douglas Robertson
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Robertson, D. (2016). Introduction to Operational Risk. In: Managing Operational Risk. Palgrave Macmillan, New York. https://doi.org/10.1007/978-1-137-44217-8_1
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DOI: https://doi.org/10.1007/978-1-137-44217-8_1
Publisher Name: Palgrave Macmillan, New York
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