Operational Risk

Companies face a myriad of risks in conducting their business. In the finance sector the notion of credit and market risk has been explicitly recognised in the supervision of banks for many years. More recently the Basel Committee on Banking Supervision has been addressing the problem of operational risks. It established the principle of developing a minimum regulatory capital charge for other risks, including operational risk, in its 1999 Consultative Paper. The exact definition of Operational Risk has evolved following analysis and consultation and it is now

“the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”.

Adelard is well placed to assist organisations research, develop and deploy methods and tools for operational risk assessment. Our experience of dependability issues at policy, regulatory and technical levels provides unique strengths, for example our:

• experience of management for dependability and of the impact of cultural and organisational issues on dependability



• methods for requirements capture and safety analysis that can be adapted and deployed in the Operational Risk context



• experience of developing arguments for the trustedness and dependability of complex computer based systems in defence, air traffic control, nuclear and other sectors



• tool support from our ASCE tool for developing and promulgating operational risk assessment



• expertise in the underlying technologies for knowledge management and internet based systems



• models that can be used to assess worst case MTBFs for computer based systems. We are working on an extension of the worst case models to fraud

Related Information

A version of Robin Bloomfield’s talk given at a CSFI/RAND Europe round-table in early 2002 on the “Security Implications for the Financial Sector of Developments in Information & Communication Technologies” is available.

The Basel Committee on Banking Supervision has an informative Website and a key OpRisk reference is “Risk Management Group of the Basel Committee on Banking Supervision, Working Paper on the Regulatory Treatment of Operational Risk, Bank for International Settlements, September 2001”.

Robin Bloomfield is a member of the Information Assurance Advisory Council.