Index

Citation

Velez, S.B. (2022), "Index", Operational Risk Management in Banks and Idiosyncratic Loss Theory: A Leadership Perspective, Emerald Publishing Limited, Leeds, pp. 189-196. https://doi.org/10.1108/978-1-80455-223-020221039

Publisher

:

Emerald Publishing Limited

Copyright © 2023 Sophia Beckett Velez

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INDEX

Account opening fraud

, 81

African tourism sector

, 50

AIG

, 7, 32, 38–39

Algorithmics, Inc.

, 114

Allied Irish Bank (AIB)

, 103, 107

AML systems

, 71, 108

Appraisal costs

, 70

Assumptions

, 19

Assurance

, 17

Assurance practices towards capital regulation effective in loss reduction

, 27, 31, 172

Assurance study findings

, 19

Asymmetric information

, 33

Avian and pandemic influenza

, 35

Back-office

, 14, 23, 37, 121

Bailouts

, 7, 52–53, 165

Bank agents (bank managers)

, 16–17

Bank holding companies (BHC)

, 15, 153

Bank leadership consensus on effective capital regulation practices

, 42

Bank losses

, 4, 10, 15, 22, 33, 59, 153, 160

Bank managers

, 17, 80, 148

Bank of America

, 63

Banking Act 2009

, 53, 165

Banking system

, 165

Banks

, 7, 16, 23

employees

, 70

and firms

, 32

frauds

, 95, 105

interconnected network

, 8

management

, 24

operational environment as host for idiosyncratic viral losses

, 153–157

Banks schemes

, 82

Barclays Bank

, 106, 130

Barings Bank

, 39–40, 57, 96, 103

Basel Committee

, 23

Basel Committee on Banking Supervision (BCBS)

, 9, 131

Basel II requirements

, 33

Basel III requirement

, 25

Basel-compliant

, 84

Bear Stearns

, 52

Benelux based Fortis Bank

, 53

Beta variant

, 169

Blockchain

, 108

technology

, 71

Board oversight

, 41

Bonus-based compensation

, 14, 156

Booster shots

, 12

Branching process

, 79

British Bankers’ Association (BBA)

, 63

Bubonic Plague

, 35

Burdens regulation places on business activities

, 52

Business continuity plans

, 131–132

Business continuity risk

, 37

Canadian banking system

, 121, 130

Capital

, 13, 25, 132

Capital adequacy

, 165

Capital ratio

, 24

Capital regulation

, 42

law

, 32

CBN

, 42

Central bank

, 10, 12, 52–53, 131, 165–167

Central European bank

, 105–106

Chicago Mercantile Exchange

, 63

Citigroup

, 63, 157

Classic trade finance

, 108

Claw back provision

, 14

Climate change

, 131

Coding process

, 21

Collateralized debt obligations (CDOs)

, 39

Commercial banks

, 46

Commercial real estate loans (CRE loans)

, 46

Commodity Futures Trading Commission (CFTC)

, 58–59, 63

Communication

, 22, 33, 107, 132, 160

Community Reinvestment Act

, 39

Community resilience

, 135

Compliance

, 16, 19, 33, 57, 79, 160, 163, 168, 170

Compliance and Ethics Group (OCEG)

, 17

Comprehensive capital analysis and review (CCAR)

, 24, 160

Conceptual framework

, 17, 19

Confirmability

, 21

Congress

, 63

Consensus

, 17–20, 22

Construct validity

, 21

Consumer confidence

, 9, 14–15

Consumer Financial Protection Bureau

, 13

Consumer Protection Act

, 24, 38, 46, 160, 167

Contact tracing

, 10, 135

Content validity

, 21

Contracts

, 114

Control environment

statements failing to meet consensus threshold

, 162

statements failing to pass to

, 161

and systemic risk

, 159–163

Control gaps

, 14

Control weaknesses

, 14, 148

Controls assessment

, 98

Controls self-assessment

, 15, 136

Corona virus

, 7, 10–11, 35

Corporations in Ghana

, 119

Costs

, 70

Countrywide Financial Corporation

, 38, 134

COVID-19

, 49

breakouts

, 132

lack of preparedness

, 133

pandemic

, 135–136, 165–170

Credibility

, 21

Credit card theft

, 105

Credit default swap

, 59

Credit extension fraud

, 82

Credit losses

, 95, 106

Credit risk

, 9, 11, 15, 54–55

Criminal activity

, 81–93

Cyber security risk

, 130

Daiwa Bank scandal of 1995

, 104

Data analysis

, 21, 71

Data collection

, 19–22, 136

Data mining

, 130

Delphi method

, 18

Delphi Study

, 19, 21, 108

Delta variant

, 168–169

Dependability

, 21

Derivatives contracts

, 113

Desirability

, 18

Deutsche Bank AG

, 46

Diamond Bank

, 42

Digital crimes

, 130

Digital system

, 71

Digitization of financial markets and banking sector

, 119

Disasters

, 131, 133

recovery system

, 163

risks

, 132

DNA

, 170

type viruses

, 8

Dodd–Frank Act

, 38, 63, 167

Dodd–Frank Asset Stress Tests (DFAST)

, 24

Dodd–Frank Bill (2010)

, 8, 13, 25, 59, 79, 157

Dodd–Frank rules

, 38

Dodd–Frank Wall Street Reform and Consumer Protection Act

, 24, 160

Domino effect

, 10, 14, 37, 40, 121, 133–134, 153

Dysfunctional behavior

, 16, 155

e-banking systems

, 163

e-Delphi design

, 18–20, 22

e-Delphi Study

, 17–21

Earthquakes

, 131

East Lothian Council

, 130

Ebola virus disease

, 35

in West Africa

, 132

Economic growth

, 167

Economic Growth Regulatory Relief and Consumer Protection Act

, 38

Economy

, 9, 12, 35, 47, 54, 133, 165–169

Effective management

, 15

Effective risk management practices

, 137, 177

Electronic Transaction Act

, 119

Enron scandal

, 106

Enterprise risk management framework

, 170

Epidemic

, 10

Epidemic diseases

, 133

Equipment malfunction

, 69

Ethical procedures

, 22

Ethics

, 170

Euro Interbank Offered Rate (EURIBOR)

, 106

European debt crisis

, 153

Evidence of trustworthiness

, 21

External failure costs

, 70

External frauds

, 105 (see also Internal frauds)

blockchain

, 108

in capital markets

, 105

governance practices second round data

, 111

governance practices third round data

, 109

insider collaboration

, 107

operational risk

, 110

self-dealing fraudulent acts

, 106

External loss data

, 23, 32–33, 136

Extrinsic motivation

, 155

Fail control

, 9

False positives

, 74

Fannie Mae firms

, 38–39, 134

Fat finger

, 69

Feasibility

, 18

Federal Agency for Financial Market Stabilization

, 53

Federal bank

, 52

Federal Deposit Insurance Corporation (FDIC)

, 24

Federal Home Loan Mortgage Corporation

, 39

Federal National Mortgage Association

, 39

Federal regulators

, 108–110

Federal Reserve Bank (Fed)

, 7–8, 24, 38–39, 80

Finance experts

, 17, 177

Financial and tax authorities

, 71

Financial crimes

, 105

Financial crisis

, 12

Financial institutions

, 16, 40

Financial Services Act 2010

, 53

Financial system

, 9, 12, 14, 37, 41–42, 52, 64, 121, 153, 154

Firms

, 32

First round

, 20, 25, 42

Fortis Bank

, 65

Fraud

, 81–93

in financial institutions

, 113

Fraud control

, 170

Fraudulent activities

, 82

Fraudulent acts

, 105

Freddie Mac

, 134

Freddie Mac firms

, 38–39

Front-office

, 70–71

Geophysical natural hazards

, 131

Ghana

, 119

corporations in

, 119

Global banks

, 119

Global economy

, 166

Global governments

, 169

Global hospitality industry

, 131, 166

Global leadership

, 165–167, 170

Global recessions

, 12

Globalization

, 119

Goal theory

, 16–17, 19

Goldman Sachs

, 63

Governance

assurance practices third round data

, 172

compliance practices third round data

, 171

and leadership

, 165–176

practices

, 20

second round data, risk management practices

, 173

third round data, risk management practices

, 174–176

Gross domestic product (GDP)

, 50

Hazell v. Hammersmith and Fulham Borough Council

, 58, 114

Herd immunity

, 168

Hierarchical model

, 133

High-risk investments

, 14, 53, 83, 156

High-risk products

, 40

House Financial Services Committee

, 46

HSBC

, 46, 63

Human errors

, 69–80

Idiosyncratic losses in mega banks and SIFIs

, 37

CDOs

, 39

CRE loans

, 46

financial institutions

, 40

governance practices third round data

, 44–45

JP Morgan

, 40–41

risk management practices

, 42

SIFIs

, 38, 47

systemic risks

, 40–41

Idiosyncratic viral losses

, 37

BHC

, 15

CFTC

, 58–59, 63

coding process

, 21

coronavirus

, 11

credit default swap

, 59

desirability and feasibility

, 18

e-Delphi design

, 18–20

financial firms

, 14

financial institutions

, 16

global economies

, 12

governance practices third round data

, 62

internal control activities third round data

, 60–61

Lehman bankruptcy

, 64

LIBOR

, 63–64

and operational risk

, 57

shadow banks

, 13

systemic risk

, 9

theory

, 7, 10, 154

unauthorized trading

, 58

viruses

, 7–8

Implications

, 25, 114

Incentive compensation

, 156–157

Increased operational risk

, 177

Inflation

, 12, 131, 166

Influenza vaccine

, 169

Information systems

, 121, 163

Information technology (IT)

, 119

disruptions

, 121

Insider collaboration

, 107

Insolvency

, 83

Insolvent

, 7, 32, 38, 52, 134, 168

Institutional agents

, 15

Instrumentation

, 153

Insufficient capital

, 13

Interconnected financial market losses

, 49

Internal and external risk loss databases

, 9

Internal audit division

, 84

Internal controls

, 42

activities

, 15–17, 32, 84, 160

annual certifications

, 84

Internal failure costs

, 70

Internal frauds

, 95 (see also External frauds)

compliance practices second round data

, 101

compliance practices third round data

, 102

examples

, 96, 103

governance practices third round data

, 99

internal control activities second round data

, 97–98

risk management practices third round data

, 100

trading scandals

, 96

Internal fraudulent activities

, 15, 103

Internet access

, 20

Intrinsic motivation

, 155

JP Morgan

, 17, 33, 40–41

Chase & Co

, 63, 114

Jump model

, 133

Key risk indicators (KRIs)

, 23–24

Keynesianism

, 165

Know your customer (KYC)

, 71

Latent errors

, 74

Leaders leading by examples

, 170

Leadership champion of code of ethics

, 170

Legal contracts

, 115

Legal expenses

, 113–115

Legal matters

, 114

Legal risk

, 113–114

Legal settlements

, 113–115

Lehman bankruptcy

, 64

Lehman Brothers

, 13–14, 38–39, 52, 65

Limitations

, 20, 32, 84

Liquidity

, 39, 41, 121, 153–154

Living wills

, 53

Loan fraud

, 82

Lobbyist

, 25, 38, 167

Local model

, 133

Lockdowns

, 11, 36, 131, 166, 168

London Interbank Offered Rate (LIBOR)

, 63–64, 106

London Whale

, 17

Lugano Switzerland

, 57

Macroeconomic indicators

, 23

Management fraud

, 83

Market risk

, 84

MasterCard computer virus

, 121

Mega Banks

, 37–47

MF Global

, 49

Middle East respiratory syndrome (MERS)

, 35, 136

Middle office

, 14, 23, 69

Minimum capital ratios

, 24

Model risk

, 170

Modern photographic printing equipment

, 81

Monetary policy

, 52, 165

Morgan Stanley

, 63, 106, 114

Mortgage fraud

, 82

Multinational banks

, 9, 49

National Futures Association

, 63

Natural disasters

, 131–134

Natural hazards

, 131

Nature of the study

, 18

Night of Liberty

, 170

Non-credit losses

, 95–96, 106

Off-balance-sheet

, 24

Omicron variant

, 169

Open Compliance and Ethics Group standard (OCEG standard)

, 17, 19, 177

Operation losses regulation and capital in banks

, 23

assurance practices third round data

, 27, 31

Bubonic Plague

, 35

governance practices third round data

, 26, 28

internal control activities third round data

, 30

internal control practices second round data

, 34

KRIs

, 23–24

ORX consortium

, 33

public health actions

, 36

risk practices third round data

, 29

Operation risk events

, 74

Operational losses

, 7, 70, 81, 148

Operational risk

, 37, 41, 54, 57, 110, 132, 155, 163

events

, 15

identification and management

, 136

Operational Risk eXchange (ORX)

, 33, 81

consortium

, 33

data exchange

, 32–33

Over the counter markets (OTC markets)

, 63

Pandemics

, 12, 131

influenza

, 10, 132

plan

, 12, 177

Panellists demographic

, 18, 20

Political pressures

, 41

Ponzi scheme

, 106

Post codes

, 130

Predatory lending

, 82

Prevention costs

, 70

PRIMER

, 136

Principal–agent risk

, 82

Principal–agent theory

, 17

Principals (shareholders)

, 17

Private banking

, 70

Problem statement

, 22

Processing errors

, 69–80

Prudential rules

, 14

Public Company Accounting Oversight Board (PCAOB)

, 159

Purposive sampling

, 17–19

Qualtrics™

, 20, 22

Quarantine

, 10–11, 35, 51, 79, 155, 166

Questionnaire response rate

, 20

Recession

, 7–8, 14, 36, 41, 167

Recommendations

, 170, 177

Recovery packages

, 12, 166

Recruitment

, 65

Regulations

, 24–25, 82, 84, 106, 113–114, 121, 157

Regulators

, 9, 14, 24–25, 37, 41, 46, 52, 54, 65, 79, 83, 106, 131, 133–134, 160, 177

Regulatory compliance

, 170

Regulatory environment

, 103

Regulatory penalties

, 16

Regulatory relief

, 167

Reliability test

, 20–21

Renewal

, 79

Repo market

, 25, 133

Reputational risk

, 9, 15, 70

Research design

, 20

Research method

, 18

Research questions

, 17–18

Research setting

, 19, 21

Risk analysis

, 134, 170

Risk appetite

, 42, 148

Risk assessment

, 42

Risk culture

, 57, 177

Risk identification

, 42

Risk management

, 135, 170–176

activities

, 135

framework

, 136

governance practices third round data

, 149–151

government regulations

, 137

operational losses

, 148

practices

, 42–43

practices third round data

, 138–147

tools

, 16, 41, 137

Risk management environment

, 79, 135, 154

Risk-weighted assets

, 24

RNA

, 8

viruses

, 8, 35, 49–50

Robots

, 104

Rogue traders

, 83, 103

Rogue trading

, 57, 156

cases

, 84

and self-dealings

, 83

Root causes

, 12, 15, 133, 135, 156

Round responses

, 160

RPA

, 71

Safeguard customer information

, 108

Safety net

, 13

Sarbanes–Oxley Act 2002

, 25, 84, 159

Saxon Mortgage Services, Inc.

, 114

Scenario analysis models

, 8, 13

Scenarios

, 79, 159–160, 167

Securities and Exchange Commission (SEC)

, 159

Self-assessment

, 15, 23, 79, 136, 168

Self-dealings

, 83, 156

Senior bank managers

, 17–18, 20

Severe acute respiratory syndrome (SARS)

, 35, 136

Shadow banking systems

, 13

Shadow banks

, 13

Shadow-banking activities

, 13

Significant financial institutions (SIFIs)

, 1, 7, 38, 57, 63

banks

, 69

governance practices third round data

, 56

higher education sector

, 51

losses and global economic impact

, 49

operational risk

, 54

RNA viruses

, 49–50

significant losses in

, 7

Switzerland’s large banks

, 55

TARP

, 53

TBTF

, 52–53

Significant losses

, 7

Société Générale

, 33

Software bug

, 69

Spanish flu of 1918

, 132

Speculative swap contracts

, 114

Spread rate

, 7–8, 10–11, 35, 131, 154–155, 167

Statutory penalties

, 113–115

Stock market

, 70, 167

STR

, 74

Stress tests

, 24–25, 160

Subject matter expert (SME)

, 69

Subprime bubble

, 156

Swedish banks systems

, 121

Swine flu

, 10

Switzerland’s large banks

, 55

Systemic operational risk events

, 160

Systemic risk

, 9, 12–13, 37–38, 40–41, 133–134, 153 (see also Technology risk)

Systemic Risk Index (SRISK)

, 32

TARP

, 53

Technology

, 22, 37

Technology and automation

, 71

Technology failures

, 9, 15, 37, 120

Technology risk

, 119 (see also Operational risk)

compliance practices second round data

, 126

compliance practices third round data

, 128

cyber security risk

, 130

governance practices third round data

, 122–123

internal control activities second round data

, 125, 127, 129

internal control activities third round data

, 124

technological consequences

, 120

trading design problems

, 121

Thefts

, 82

Tier 1 capital ratio

, 24

Timely reporting

, 59

Too big to fail (TBTF)

, 52–53, 165

Tourism sector

, 11, 51, 166

Toxic debt

, 13

Trade finance

, 108

Traders

, 155–156

Trades

, 69

Trading design problems

, 121

Trading scandals

, 96

Training

, 120, 177

Transferability

, 21

Trustworthiness

, 21

UIPath Robot processing

, 125, 127

UK House of Lords

, 114

Unauthorized trading

, 58

Unemployment

, 49, 52

United Bank of Switzerland (UBS)

, 57

Vaccination programme

, 168

Validity

, 21

Viral losses

, 58

Viruses

, 7–8, 10, 49, 131–134, 168

Volatility

, 58, 84

Volcker rule

, 13, 157

Volker Rule Bill

, 25

Wachovia

, 46

Wall Street Reform

, 46

Wells Fargo

, 46

World Health Organization (WHO)

, 7, 166

XBRL

, 71