Věra Mazánková, Michal Němec
This article illustrates the nature and significance of operational risk with regard to financial stability, using specific examples of major operational risk events in the Czech Republic and in other countries, and identifies the impacts of the newly introduced capital regulation of operational risk. It looks in detail at the incipient practice of risk-sensitive operational risk measurement using methods based on financial institutions' internal models. We also explore the issue of calculating the mandatory capital coverage for unexpected operational risk losses using group-wide models.
Issued: June 2008
Download: Thematic article in the Financial Stability Report 2007 (pdf, 111 kB)