Banks Actively Addressing Operational Risk - Report
Moody’s has issued its first Operational Risk Assessment (ORA) reports for several European banking groups. The report found that the banking industry is taking steps to address the challenges of assessing and managing operational risk, spurred primarily by the provisions of the ‘First Pillar’ of the forthcoming Basel 2 Accord. Moody’s noted that this is still an evolving discipline within the broader risk management area, compared to market risk and credit risk. ‘Debates about the merits and shortfalls of various methodologies continue across the banking industry and the bank regulatory community’, said Brendon Young, Operational Risk Specialist, who co-authored the ORA reports. The rating agency reiterated its belief that any reliance on quantitative data has to be seen as an integrated first step in a more comprehensive qualitative process of assessing and managing operational risk.