CHAPTER 16
OPERATIONAL RISK MANAGEMENT USING QUANTITATIVE METHODS
16.1 INTRODUCTION
16.2 DEFINING OPERATIONAL RISK
16.3 DEFINING QUANTITATIVE ANALYSIS (QUANTITATIVE METHODS)
16.4 ADVANTAGES AND DISADVANTAGES OF USING QUANTITATIVE METHODS
16.5 OPERATIONAL RISK ASSESSMENT AND MANAGEMENT—ESSENTIAL COMPONENTS
(a) Identify Key Processes
(b) Identify and Assess Risk
(c) Failure Modes and Effects Analysis
(d) Business Process Modeling and Simulation
(e) Application: Front Office Systems for a Proprietary Trading Firm
(f) Trading Room Operational Risks and Risk Management
(g) Business Process Model for a Trading Room
(h) Evaluating System Changes Using Business Process Modeling Software
(i) Conclusion
16.6 QUANTIFY OPERATIONAL RISK
16.7 MONITOR AND CONTROL OPERATIONAL RISK
16.8 CHANGE MANAGEMENT
NOTES
REFERENCES
16.1 INTRODUCTION
The Merriam-Webster English Dictionary defines risk as "The possibility of loss or injury" or "Someone or something that creates or suggests a hazard." Risk management is the process of identifying, measuring, or assessing risk and then developing strategies to manage/mitigate the risk.
Even though the word risk has a negative connotation, the outcome of taking risks can be either positive or negative. Individuals and corporations take calculated risks to achieve their goals and objectives. There are several types of risks that are identified with different industries or organizations (i.e., market, credit, ...
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