Ten Laws of Operational Risk: Understanding Its Behaviours to Improve Its Management (Hardcover)

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Introduction

I.             Ten Laws of Operational Risk

1.            Patterns in the behaviour of Operational Risk

2.            The occurrence and severity of loss events

3.            Concentrations and Systemic Operational Risk Events (SOREs)

4.            Homeostasis, risk transference, transformation & conservation and active risk taking

5.            Three taxonomies: inadequacies or failures, impacts and causes

6.            Conclusions – How and Why

II. Operational Risk management tools designed for success

7.            Defining and cascading Operational Risk appetites

8.            Risk & Control Self-Assessments

9.            Scenario analysis

10.         Operational Risk capital modelling

11.         Stress testing

12.         Reverse stress testing and the transfer of risks via insurance

13.         Day-to-day Operational Risk management:

1.            Incident management and root cause analysis

2.            Control assurance and the nature of control failures

3.            Predictive metrics

4.            Change management, including new product & transaction approval and product stress testing

5.            Reputational Risk quantification and management

14.         Conclusions

III. Predictions of the future behaviours of Operational Risk

15.         Identifying emerging threats

16.         Predictions of the future behaviours of Operational Risk:

1.            Pandemics

2.            Climate Change

3.            Cyber-crime

4.            Technological advances, including algos, AI and machine learning

IV. Conclusions

17.         Conclusions and Operational Risk strategy:

1.            Summary of the behaviours of Operational Risk

2.            Overview of the Ten Laws of Operational Risk

3.            The underlying drivers of the behaviours of Operational Risk

4.            Summary of the key enhancements to Operational Risk management tools

5.            Alternative strategies to meet the objectives of Operational Risk managers

Appendices

I.             Taxonomy of inadequacies or failures:

I.1 Mapping to Basel II

I.2 The nature of events

I.3 The nature of control failures

II.           Causal taxonomy

III.          Impact taxonomy

IV.          Specialist risk taxonomies:

IV.1 Cyber risks; and

IV.2 Technology risks.

Glossary

Bibliography

Reference