ECONOMIC ESSENCE AND SOURCES OF OPERATIONAL RISK IN THE BANK

Authors

  • Luidmila Primostkа
  • Natalia Sokolovska

Keywords:

bank, operational risk, sources of operational risk, operational risk factors, operational risk management

Abstract

Banking activities are constantly exposed to operational risk. Analyzing and summarizing international and national approaches to determining the economic essence of operational risk, the evolution of changes in views on operational risk and its impact on banking activity through the prism of studying world experience was considered. As a result of the investigation, the economic essence of operational risk has been deepened, its inherent difficult to predict and destructive nature of the impact on banking activities. Four sources of operational risk are identified. The factors and features of operational risk in the context of each source are determined.
Sources of operational risk are personnel (people), processes, systems and external events. Characteristic features of operational risk are the complexity of its assessment, measurement and forecasting. The manifestation with a delay in time, but with critical losses for a bank, is most inherent in the operational risk arising from the source people. The interrelation of operational risk with other risks is a feature that is inherent in all four sources of operational risk of a bank.
Prospects for further research may be taking into account the events of the operational risk implementation, significant in the history of world banking practice, to determine effective mechanisms and tools for managing such risk. This is the basis for building an effective operational risk management system and protecting banking activities from losses. Technological development and global transformation processes lead to the fact that operational risk management will become a key component of the risk management for every bank.

Published

2022-02-02