Basel II / Sarbanes Oxley: Operational Risk is the challenge 542
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Within the financial services industry, the more widely understood financial risks, such as market risk and credit risk, have taken precedence at both senior management and board levels.
But, things change
The scale and the complexity of the underlying industry risks and the systemic effect of losses incurred to date, are too large for regulators to ignore.
Recently, operational risk has become increasingly prominent on the agenda of regulators, investors and management.
Operational risk is the risk of direct or indirect losses resulting from inadequate or failed internal processes, people and systems or from external events. It includes, but is not limited to, the risk of inadequate or failed internal systems such as computer failures or fraud, compliance issues, as well as external events, including lawsuits.
Operational risk is the real challenge for Basel II, Sarbanes Oxley and many other regulations