Most of the significant large loss stories in financial institutions are due, at least partly, to the occurrence of operational risks. Whilst financial institutions like to show that they know about this type of risks, the profession has been slow to learn from other industries for which risk management is a critical factor. The banking world has been subject to large debacles due to e.g. rogue trading and unharnessed macroeconomic turbulences, which could be better handled.

It is now critical for banks to set up robust but flexible comprehensive frameworks to handle these risks at reasonable costs and to the satisfaction of stakeholders, without compromising any legitimate drive to advance in sophistication. After the slow start of operational risk management, banks now have to find out, formalize and implement techniques to identify, understand, measure and proactively handle operational risks. Methods for that can vary from one institution to another, but the price of failure to find the most appropriate methods and the rewards for success are both too high: straight loss, regulatory effects, reputational loss etc. can no longer be regarded just as a cost of doing business. Operational risk management has now come of age. We review here a few new techniques for handling operational risk.

In this webinar, after going through a few basics of operational risk, we point at a few pitfalls and equip participants with a few tools and a framework to understand and deal with operational risks in their institution or department. Too numerous are the people who, until the next disaster, though they fully understood the risks of their activities, just to have to think again. We equip people with grids of analysis to allow them to carry on a successful exchange of views with operational risk departments.