Operational Risk Management - The Quantification Challenge

Overview

Traditional, audit-based (qualitative) approaches to operational risk management still dominate the market, but the use of sophisticated modelling techniques for operational risk measurement has become much more prevalent. For monitoring within business units, attempts to capture global measures and forecasts based on these measures are superseding simple indicators of failure rates. This has introduced a new challenge for ORM – data issues.

This Chartis Research report examines the operational risk quantification challenge describing the:

• Key data issues
• Advanced Measurement Approach components
• External data
• Integrating the components of the AMA calculation