CoachOperational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events; it includes legal risk and excludes strategic and reputational risk. An operational loss event is an occurrence of such a loss, recorded with its date, amount, business line and cause.
Examples
Example 28.3 (Capital for operational risk)
A bank with a BI of EUR 35 billion has a BIC of billion. With average annual losses of 0.5 billion, its loss component is 7.5 billion, its ILM 1.107 and its capital 5.94 billion; with 0.25 billion of losses, the ILM is 0.904 and the capital 4.85 billion.