A one-day training seminar on Basel-II & Operational Risk was conducted at Learning Resource Centre, State Bank of Pakistan, under the auspices of Business Solutions here, on Tuesday.
Focus of the seminar was to give an overview of operational risk with respect to Basel-II and highlight different issues involved in managing operational risk in banking. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events.
Many risk professionals view it as the biggest risk any organisation faces. However, unlike credit or market risk, it is far more difficult to identify and quantify operational risk. Models for its quantification are still in their infancy and are far from perfect.
The management of specific operational risks in financial institutions is not a new practice. What is new is the emergence of operational risk as a comprehensive process/framework in the wake of Basel-II.
Regulators, including the Basel Committee on Banking Supervision, have firmly thrust operational risk management onto centre stage by imposing, for the first time, an explicit operational risk capital charge under Basel-II.-PR