The Financial Services Industry (FSI) is undergoing
revision of capital requirements as a result of the Bank of
International Settlements’ New Basel Capital Accord, also known as
Basel II.
One of the most radical changes in the
new accord is the inclusion for the first time of operational risk
assessment, where the previous 1988 accord only covered market and
credit risks.
While operational risk can be thought
of as a ‘catch all’ for whatever is not covered by the other
categories, a stricter definition is "the risk of loss resulting
from inadequate or failed internal processes, people and systems,
or from external events."
So this includes the effect of
technology failure, fraud, legal uncertainties, and extreme events
such as earthquakes. It does not include business strategic
decisions, and reputation risk such as loss of confidence in a bank
due to, say, people failure.
Click here
to read this report >>
About Butler Group Research and Advisory
Services
This paper is reproduced from Butler Group's Research and Advisory
Services. For more information on this and other technology focused
services, contact Mike James on +44(0)1482 586149, email
mike.james@butlergroup.com
or visit www.butlergroup.com/company/products.asp