Operational Risk Management, 2nd Edition

Preface

The evolution of operational risk over the past 20 years has given rise to a new profession: the operational risk manager. This book equips the student or practitioner of operational risk with all of the framework elements that are needed in order to establish a successful operational risk framework.

Banks have been working with formalized operational risk frameworks for many years now, but the rise of the digital banking paradigm has brought new entrants into the financial services space who need to manage their risks effectively.

Financial technology companies (fintechs) face the same operational risks as banks, and they are finding that the operational risk practices that banks have adopted are also key to their own survival. Operational risk events and reputational impacts require effective management in both fintechs and in banks, and the approaches outlined in this book provide practical methods that can be applied across the whole of the financial services industry and beyond into other industries.

In the past year, several fintechs have experienced intense regulatory scrutiny and some negative reputational impact, often stemming from operational and compliance weaknesses or failures. An effective operational risk framework can help protect these emerging “banking” companies from future reputational damage and fines.

The speed of digital innovation requires banks and fintechs to look for ways to keep their risk frameworks in touch with the changes that are occurring ...