O'Reilly logo

The Operational Risk Handbook for Financial Companies: A guide to the new world of performance-oriented operational risk by Brian Barnier

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

2.5. Improving Product Management and Fraud Prevention

“It’s important to understand how a product works to prevent operational losses. For example, in a community bank (or indeed any other bank), consider a credit product and the potential for operational losses from fraud. The best example that comes to mind is in the bond portfolio if banks accept certain incremental risk exposures in exchange for slightly higher yields. For instance, in the late 1990s many debt instruments were issued with ‘credit enhancement’ features that allowed them to be traded at slightly higher yields. The credit enhancement features seemed relatively benign, until the market turned and bankers were required to recognize significant losses on assets that they believed ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required