Operational Risk

In banking, operational risk refers to non-financial and non-market risk. Mitigating operational risk covers the risks posed by a vast range of potential activities: the robustness of business models to changing business, technology and demographic conditions, internal business and compliance processes, regulatory risk reporting, the governance framework, activities of employees (fraud, mis-selling, circumventing anti-money-laundering controls etc.), client on-boarding, vendor risk, and risks posed by IT architecture (vulnerability to system fails or cyber attacks). The quality of operational risk management has been improved by the application of Big Data, Artificial Intelligence, machine learning, automation and advanced risk analytics. These are transforming operational risk management from a by-definition backward-looking process to an exercise in real-time monitoring and operational risk prevention.