Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. This includes legal risk, which is the risk of loss resulting from failure to comply with laws as well as prudent ethical standards and contractual obligations. It also includes the exposure to litigation from all aspects of an institution’s activities. The definition does not include strategic or reputational risks.
o To manage various risk events which could potentially result into losses
o To involve various functionaries in the bank in the process of risk monitoring and risk and control self assessment
o To improve operational processes / systems / policies / procedures over time
o To implement CBB / Basel II guidelines
o To improve return on capital by way of reducing operational losses and improving operational efficiency
o To get better rating from credit rating agencies on account to enhanced risk management practices
o Providing you a proper Operation Risk Framework.
o Help conduct comprehensive risk profiling.
o Assessing, Monitoring and Controlling Operational Risk thru Risk and Control Self Assessment (RCSA) process
o Mitigating Risks instantaneously by way of robust risk monitoring mechanism.
o Controlling Losses thru root cause analysis of losses and maintenance of loss database.
o Improve the image of the Bank and External Rating of the Bank due to enhanced risk management practices.
o Improving Operational Efficiencies due to continuous risk monitoring and improving operational processes / procedures.
o Cost Reductions due to enhanced due diligence and reduction of operational losses.
o Better customer service
o Effective measurement of Capital for Operational Risk.
o Regulatory compliances such as CBB / Base II guidelines