
170 Operational Risk Control
Timely corrective action is a critical variable. Typically, the cost is lower if the error
is caught in time, particularly when the potential for damage is higher. That is why the
preceding paragraphs have emphasized that the best strategy is that of projecting
forward on operational risk. This requires:
䊏 Establishing the time horizon
䊏 Defining the set of market parameters
䊏 Examining the distribution of likely low frequency op risks
䊏 Examining the distribution of high frequency op risks, and
䊏 Having an effective mechanism for corrective action.
Can this be part of the scoreboard solution? The answer is: ‘Yes!’; that’ ...