BloorResearch.com

Operational risk management has become a buzzword of late. Many believe that this is due to the fact that the New Basel Accord (the final version of which is due to be released later this year) has introduced a capital charge for operational risk in its move to provide a more risk sensitive regulatory framework. Although the overall capital ratio remains unchanged, the measure of risk faced, however, is now more narrowly defined. This is due to the requirement to measure operational risk.

Although the Basel II Accord has raised the stakes and awareness, operational risk management is not about working out a capital-at-risk number that represents the collective operational risk that a financial institution faces. It is more about managing the operational efficiency and effectiveness of the whole enterprise by understanding the risks, controls and process of the whole business.

This report seeks to take a cross-section of what operational risk means for the financial institutions and what is being done by the industry in terms of solutions. It includes a review of ORM vendors - Algorithmics, Raft, HSBC OpRisk, Centreprise, SAS, Accurate Software and RCS.

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