
8 Operational Risk Control
– because this is fundamental in identifying salient problems and setting priorities.
Core risks are those that an entity is in business to take, for instance:
䊏 Loans are core risks for credit institutions.
Non-core risks are those the firm has no clearly perceived comparative advantage in
bearing, yet it is taking them. An example is:
䊏 Speculation through derivatives, as contrasted to true hedging.
This is an example from credit risk and market risk domain, but similar criteria also
exist in connection to operational risk. It is the responsibility of the board and the
CEO to make a formal determination of what the core risks ...