
The use of insurance policies to mitigate operational risk 243
11.6 Frequency and impact of events in operational risk
transfer through insurance
Like any other type of risk coverage, operational risk transfer using insurance
indemnifies the credit institution from losses arising from a given type of op risk
exposure. Also, as with all other types of insurance, before the firm can buy the
insurance protection, it has to demonstrate that it has an insurable interest; and the
insured entity can collect only if it actually incurs a loss.
Seen under this light, insurance-linked operational risk coverage is hedging. There
exists, however, a major difference ...