Basel II defines operational risk as the risk of loss resulting from inadequate or failed processes, people and systems or from external events. This definition includes legal risk but excludes strategic and reputational risk.
The operational risk concept embraces many different elements and dimensions. Risks attached to systems and processes are tangible, easier to quantify and easier to attach a risk owner with accountability and authority to manage these risks. Continue reading
Many companies, public and private, have started to formalize their risk assessment procedures. Ferma’s benchmarking survey from 2012 has shown that regarding risk assessments and quantification, basic methodologies are in place, risk assessment workshops (60% of the EU companies) and internal/ external databases (44% of the EU companies) are the most widespread practices. Continue reading
Private and public companies, financial institutions, individuals and even states are living in a risky world. This makes risk management an important and responsible function in every organization. However, is risk management also a “risky” task? Are there factors and shortcomings which may affect our work and our ability to provide a reasonable assurance to our Boards, stakeholders, owners and management? Can we, risk managers, mislead our organizations? Can we ignore or underestimate our risks? Continue reading