Abstract
A multitude of factors can create operational risks, and the possible financial losses that can be resulted in are important. The appearance of various prudential regulations for appropriate operational risk management, in a short period of time, contributed to the inclusion of this risk as one of the most significant risks in the banking sector.
Highlights
The financial crisis of the past decade has affected the financial stability of the banking systems, and the effects of this crisis were much more severe than all the scenarios put by the banks in their stress tests, proving that the financial institutions were governed by an inadequate risk management, in which the risks have not been correctly identified, managed and monitored
This paper presents the component elements of operational risks, the stages in operational risk management, along with the causes of this risk
The article continues with the presentation of an analysis of the evolution of the minimum capital requirement for the operational risk calculated in the Romanian banking system, from 2008 to 2018
Summary
The financial crisis of the past decade has affected the financial stability of the banking systems, and the effects of this crisis were much more severe than all the scenarios put by the banks in their stress tests, proving that the financial institutions were governed by an inadequate risk management, in which the risks have not been correctly identified, managed and monitored. The financial losses caused by the materialization of the operational risk events and the weakening of the financial stability of the credit institutions have drawn an increased attention to this risk, both from the point of view of banks, and from the point of view of the supervisory authorities. The most important prudential regulations in the field and the calculation methods for the minimum capital requirement for operational risks are presented and materialized in a case study conducted by the author for a bank in Romania. Crisis simulations for operational risks can influence the analysis of the capital planning process, a fact highlighted by another case study conducted by the author. The article continues with the presentation of an analysis of the evolution of the minimum capital requirement for the operational risk calculated in the Romanian banking system, from 2008 to 2018
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