Operation Risk Management Case Study

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Recently operation management and operating activities have been developed significantly in the finance industry. Financial technologies, different kind of banking services and IT have played a very crucial role to use operation management widely. To addition this in 2006, Basel II framework was introduced in order to allocate enough capital to hedge operational risk. Operational risks are not a common issue in the finance industry but also we can face supply chain and other industries.
This research report draws on operational risks management process reference model and other factors of operational risks such as IT, operating system and cyber-attack in the first chapter. It will describe finance industry operational risks and also supply
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1.3. What is the operational risk?
In general terms; the operational risk is defined as all the risks which are excluded from the credit and market risk. The Basel Committee defines operational risk as:
"The risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events". This will be defined the legal risk, however, it does not include strategic and reputational risk. Legal risk includes, but is not limited to, exposure to fines, penalties, or punitive damages resulting from supervisory actions, as well as private settlements (Van Greuning, & Brajovic-Bratanovic, 2009).
Financial institutions may lose from its different types of operations because the operational risk is relevant to the sources of risk or events which will impact on the process of operations. The old-style bases and fundamentals of risk are:
 People;
 Processes;,
 Systems;
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It is also one very important risk which occurs when the company has ineffective and inefficient operational processes as direct or indirect failed internal processes such as nonbeing laws and regulations, human resources practices. If inside companies operating processes connect each other independently and cannot perform well, it would cause lack of adequate charting across lines of operations (Jobst, 2007; Moosa, 2007). In the case of an unmanageable process, risks would cause troubles for companies, for example, financial institutions will be fined by regulators, litigations, loss of customers, and also would lose its
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