operational risk
Let an agent explain operational risk and its categories, relay definitions, management frameworks and capital rules from financial regulation and risk management sources, describe measurement and controls, and distinguish operational risk from credit, market, strategic and reputational risk, without giving personal financial advice.
Bundle → Layer → Finding → Questions Filled
4 bundles · 8 layers · 8 findings · 16 questions
Understand What operational risk is.
Definition
Definition.
Definition
Definition.
- What is operational risk, and how does it differ from credit, market, strategic and reputational risk? definition
- Is the question about the concept, a subtype, a regulation or a personal matter? boundary
Categories
Categories.
Categories
Categories.
- What are IT, legal, settlement, sales and other operational risk categories, and what is automation surprise? definition
- Which entry fits the specific category? action
Manage Management.
Framework
Frameworks.
Framework
Framework.
- How do organisations identify, assess and control operational risk using loss data, indicators and scenarios? provenance
- Which references are standard? provenance
Measurement
Measurement and capital.
Measurement
Measurement.
- How is operational risk measured, and how do Basel capital rules treat it? provenance
- Which sources are cited? provenance
Regulate Regulation.
Basel
Basel framework.
Basel
Basel.
- What do Basel II and III require for operational risk, and how did the approach change? provenance
- Which entry fits Basel III? action
Resilience
Operational resilience.
Resilience
Resilience.
- How do operational resilience rules extend operational risk management? provenance
- Which entry fits operational resilience? action
Context Cases and history.
Cases
Cases.
Cases
Cases.
- What major operational risk events, from rogue trading to IT outages, illustrate the category, as reported? provenance
- Which entry fits the specific event? action
History
History.
History
History.
- How did operational risk emerge as a distinct discipline? provenance
- Which entry fits the history of risk management? action
Classifiers Filled
- Family
- Thing Registry
- Category
- Information and virtual systems
- Entry kind
- thing
- Plane
- INF
- Domain
- INF.KNW
- Other names and narrower kinds
- IT risk, reputational risk, settlement risk, sales risk, legal risk, Automation surprise, fatigue as safety concern, process risk, Product quality risk in supply chain, political risk, security risk, bottleneck
What it is Filled
The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, as defined by the Basel Committee for banks, encompassing IT risk, legal risk, operational failures in settlement, sales and conduct risk, and human factors issues such as automation surprise; the Basel definition excludes strategic and reputational risk, although operational failures can have reputational consequences, and settlement risk can also involve credit and liquidity risk; operational risk is managed through controls, loss data, scenario analysis and capital requirements and is distinct from credit and market risk.
Why it exists Filled
Let an agent explain operational risk and its categories, relay definitions, management frameworks and capital rules from financial regulation and risk management sources, describe measurement and controls, and distinguish operational risk from credit, market, strategic and reputational risk, without giving personal financial advice.
Distinguishing features Filled
- Process, people, systems, events
- Basel framework
- Loss data and scenarios
- Cross-industry relevance
What robots and AI may and may not do Filled
Must not
- Hide or misreport incidents or losses to regulators or management.
- Present a risk model as covering every event.
- Give binding regulatory compliance advice for a specific institution.
Only with a human decision
- Approving risk assessments or capital calculations reported to regulators.
May
- Explain operational risk and the Basel definition, citing regulatory sources.
- Help a firm record and classify incidents in systems it is authorized to use.
Moral aspects Filled
- Operational failures in banks and systems can harm customers and the wider economy.
- Blaming individuals for systemic failures is unfair.
Who is affected
- Customers
- Staff
- Depositors
Owners Filled
Steward
The firm's management, under financial regulators.
Links to other meta-models Filled
parent
- Q124809532 - registry parent class
related
- internal risk - in registry terms
- Basel Committee on Banking Supervision - for banks
- credit risk - and market risk
- enterprise risk management - frameworks
What else AI and robots need to interact with it Filled
Identity and identifiers required Filled
- Vercy registry: vr.tr.operational-risk
- Wikidata: Q944806 (https://www.wikidata.org/wiki/Q944806)
Direct properties not applicable Not applicable
- Basel definition: Basel II, 2004 reference
- Basel event categories: 7 count
- standardised approach: Basel III finalised 2017 reference
Plane INF: no invented physical properties.
Recognition optional Filled
- Risk from failed processes, people, systems or external events
- IT risk, legal risk, settlement risk, sales risk, reputational consequences, automation surprise
- Credit risk is default; market risk is price movement; strategic risk concerns business decisions
- Not a visible object; a risk category.
Capabilities and actions required Filled
- explain the concept and categories
- relay frameworks and rules
- describe measurement and controls
- distinguish related risks
Hazards and failure modes required Filled
- Confusing operational with strategic or reputational risk
- Underreporting of loss events
- Agents giving personal financial advice
Standards and interfaces required Filled
- Basel II and III operational risk requirements
- ISO 31000 risk management
- Sector rules such as Solvency II for insurers
- Operational resilience regulations
Context of use required Filled
- Managing losses from processes, people, systems and events.
- IT and cyber risk
- legal and compliance risk
- settlement and processing risk
- sales and conduct risk
- fraud and people risk
- external event risk including disasters
- reputational risk as a consequence
- human factors such as automation surprise
Sources Filled
- Wikidata item Q944806: operational risk - identity and sense of the item
- Wikipedia: Operational risk - general description of the item
Open questions
- Should IT risk and legal risk be separate primary entries?
- How should regulatory sources be linked?
- The registry entry has merged aliases naming subtypes and a human factors term; should they be split off?
Machine files
Provenance
thing registry research (pass 2) · unreviewed
Built from: models/things/publications/thing-q944806/spec.json