Worrying but accepting new measurements: the case of Swedish bankers and operational risk

Abstract

This article examines the question of users’ acceptance of measures that they regard as problematic. The question is investigated in the context of the new capital accord issued by the Basel Committee. The Basel Committee has issued a new capital accord governing banks’ regulatory capital. Most countries around the world support the accord. In the new accord, operational risk is given particular emphasis and in this study the behavioural implications associated with operational risk are critically identified. The empirical evidence is grounded on a unique body of 23 unstructured interviews with senior managers from all (four) listed banks in Sweden. The interviewees raised serious concerns regarding the measurement of operational risk and their critique was of such magnitude that the future of the accord could be at stake. On the other hand, the interviewees identified several advantages with the new accord and it can be concluded that the interviewees supported the accord and its conception of operational risk. The question then arises as to why both the accord and the concept of operational risk are supported in spite of such serious criticism. Arguably, the Basel Committee uses persuasive methods of communication in the accord itself and in supporting documents that present the accord as both reliable and necessary. This manner of communication, which ignores potential criticisms, functions so as to silence possible alternatives.