Operational Risk Management In Banking Essay
Indian banking today is in the mid of an IT revolution. However, new private sector banks and foreign banks have an edge over public sector banks with regard to the implementation of technological solutions. To be successful in this competitive environment, these banks have to take certain steps like cost reduction by economies of scale, better relations with the customers by providing better services and facilities to them. Pressure of performance and profitability will keep them on their toes all the times as the shareholders expect good performance along with good returns on their equity. The changing scenario and the new technologies like internet banking, mobile banking, improvement in payment technology, etc. can be helpful in increasing the scale of economies in providing financial services. With the help of technology, banks are now able to offer such products and services, which were difficult or impossible earlier with traditional banking. Indian banks have been able to take one step in this direction - physical cash has been replaced by anytime, …show more content…
The management of operational risk is not a new practice; it has always been important for banks to try to prevent fraud, maintain the integrity of internal controls, and reduce errors in transactions processing and so on. However, what is relatively new is the view of operational risk management as a comprehensive practice comparable to the management of credit and market risks in principles. Failure to understand and manage operational risk, which is present in virtually all banking transactions and activities, may greatly increase the likelihood that some risks will go unrecognized and
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