Risk, company-specific and risk, operational (operational risk)

In the case of a company in general and an institution in particular, all disturbances, whether internal or external, which could hinder a company in the provision of its services and lead to losses. The main risk categories are: – personnel, including management and supervisory board, – the organization in the widest sense, – the technology used, and – external influences (the risk that human error or management failures, deficiencies in technology used, or the organization in the widest sense, will result in unexpected losses. This relates to both internal and external events). – According to Basel II, operational risk must be backed by equity capital based on individually defined criteria. However, it is disputed whether operational risks can be mitigated by means of additional equity. – Under Basel II, institutions are also required to measure company-specific risk using very specific methods. Corresponding measurement methods are part of the Capital Adequacy Directive (CRD) that has now been adopted. Specifically, three methods are provided for institutions to determine the minimum amount of capital they must hold to adequately cover their operational risk. These are – the basic indicator approach – the standard approach, and – the advanced measurement approach (AMA). – See contagion effects, defects, due diligence, fault tolerance, flash crash, business continuity, information assurance, IT risks, capital adequacy directive, catastrophe risk, country risk, markto-model approach, models task force, pandemic, phantom risks, rating steps, legal risks, reputational risk, residual risk, risk, banking, risk, personnel, risk, enterprise, risk capital, economic, risk culture, risk and solvency assessment, enterprise, risk avoidance policy, electricity risk, system risk, technology risk, transfer risks, behavioral risk, loss event, video conference, maintenance time. – Cf. Deutsche Bundesbank Monthly Report of April 2001, p. 28, Deutsche Bundesbank Monthly Report of September 2004, pp. 86 ff. (treatment of operational risk under Basel II; on p. 87 overview), ECB Monthly Report of January 2005, p. 54 (Basel II), BaFin Annual Report 2004, pp. 100 ff. (risk measurement procedures in practice; industry action AMA), BaFin Annual Report 2005, p. 121 (applications to use the AMA), BaFin Annual Report 2006, p. 115 (explicit capital requirements for operational risk by SolvV), BaFin Annual Report 2007, p. 135 f. (new AMA approvals), BaFin Annual Report 2008, p. 132 f. (approval process for Advanced Measurement Approach; discussions on basic indicator approach), BaFin Annual Report 2009, p. 152 f. (joint study by Deutsche Bundesbank and BaFin regarding institutions using the basic indicator approach), BaFin Annual Report 2010, p. 165 (additional institutions have received approval to use the AMA) and the respective BaFin Annual Report, chapter “Supervision of Banks, Financial Service Providers, and Payment Institutions,” section “Supervisory Activities,” Deutsche Bundesbank Monthly Report of June 2006, p. 36 f. (dependence on a specific IT system as a special form of concentration risk), Deutsche Bundesbank Monthly Report of December 2007, p. 64 (model risk standards), Deutsche Bundesbank Monthly Report of January 2009, p. 73 (components of the AMA approach), Financial Stability Report 2011, p. 23 et seqq. (country risk impacts both sides of the bank balance sheet in view of the sovereign debt crisis in the EMU), ECB Annual Report 2012, p. 133 (European Commission Capital Requirements Directive and Regulation [CRD IV/CRR]).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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