
Management control of operational risk 11
is not possible with fundamental principles (more on auditing and internal control in
Chapter 2).
One of the basic principles to be observed in connection to the control of operational
risk is materiality. As an accounting principle, materiality means relative importance – a
concept critical to all procedures. In operational risk control, materiality is a challenge
because of difficulties in weighting losses from op risks against the costs of their control
within and across:
䊏 Product lines, and
䊏 Business units.
The correlation between operational risk type and loss experience might differ
significantly depending ...