EBI Publications

IT/System Risk: Potential losses due to system failures and programming errors Processes Risk: Potential losses due to improper information processing, leaking or hacking of information and inaccuracy of data processing At first, operational risk was commonly defined as every type of unquantifiable risk faced by a financial institution. Therefore, operational risk is resulted from internal threats caused by a failure within the financial institution’s operations or external threats such as fire, wars, earthquakes, terrorist attacks, data breaches or any other unexpected disasters. (BCM) In Banks and Financial Institutions Banks and financial institutions are exposed to operational risk, which is defined according to the Basel II committee as "the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”. Operational ris k can widely occur in banks due to human errors or mistakes. Examples of operational risk may be incorrect information filled in during clearing a check or confidential information leaked due to system failure. Operational risk can be categorized in the following way for a better understanding:- Human Risk: Potential losses due to a human error, done willingly or unconsciously Business Continuity Management (BCM) In Banks and Financial Institutions Issue (23)