A Frame of Operational Risk Management System Based on Case-Based Reasoning

Abstract

With more and more increasingly significant attention has paid to operational risk, it is urgent for the banks to find some suitable approaches to measure and manage their operational risk. An operational risk management system (ORMS) is set up, which based on case-based reasoning (CBR) methods. The frame of operational risk management system is presented. Some key techniques associated with the CBR method are discussed, such as the case representation structure and case retrieve methods, which are designed under Basel II. Finally, the functional modules and some sub-functional modules are laid out, which are developed in accordance with the process of operational risk management.