Academic journal article ABA Banking Journal

Operational Risk on Ice

Academic journal article ABA Banking Journal

Operational Risk on Ice

Article excerpt

Financial institutions can manage risk from all fronts with RiskOps version 2.1--modeling software from NetRisk, Greenwich, Conn. Use of modeling analysis for operations is comparatively new, says NetRisk, but these tools can bring the same clarity--and standard definitions of risk--here as they do in market and credit areas. With the software, a financial institution can examine the exposures for everything from unauthorized trading to poor business practices, or technology meltdown.

The updated software offers an enhanced selection of modeling and database management capabilities. It works with a database that comes loaded with historical loss data. The database also lets a company define it's own sources of more frequent, smaller losses of the sort typically not on public record. The modeling application looks at sources of risk that include:

1. people-related loss, which typically focuses on willful mishandling of procedure (e.g., employee misdeeds, fraud, interpersonal conflict such as harassment or discrimination resulting in lawsuit or inappropriate implementation of policy);

2. …

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