Operational Risk Management: Analysis of Challenges faced by banks in India

Abstract

Operational risk management is gaining significance in today's dynamic banking environment especially due to the technological disruptions faced by Indian banks today. The objective of this research paper is to analyse the issues faced in management of operational risk. This paper uses a questionnaire-based interview of senior banking professionals to analyse the challenges in operational risk management. It is more complex as compared to other banking risks and in that context an in-depth analysis of the various issues/challenges has been done. Operational risk incidents in banking industry have increased significantly. Such incidents are non-repetitive, so historical trends are not useful here. Availability of data is also one major constraint. The banking system in India should be very proactive in constructing a robust operational risk management framework. Operational risks should be properly managed else it can have serious implications on the reputation of the bank.