2. Operational Risk Management: An Overview

  1. Ron S. Kenett PhD, BSc Chairman CEO Research Professor Professor Associate Director Editor in Chief President1,2 and
  2. Yossi Raanan PhD, BSc Senior Consultant Strategic Partner Senior Lecturer former dean head chairman director3,4
  1. Yossi Raanan PhD, BSc Senior Consultant Strategic Partner Senior Lecturer former dean head chairman director3,4,
  2. Ron S. Kenett PhD, BSc Chairman CEO Research Professor Professor Associate Director Editor in Chief President1,2 and
  3. Richard Pike CCH SWORD Product Director

Published Online: 19 AUG 2010

DOI: 10.1002/9780470972571.ch2

Operational Risk Management

Operational Risk Management

How to Cite

Raanan, Y., Kenett, R. S. and Pike, R. (2010) Operational Risk Management: An Overview, in Operational Risk Management (eds R. S. Kenett and Y. Raanan), John Wiley & Sons, Ltd, Chichester, UK. doi: 10.1002/9780470972571.ch2

Editor Information

  1. 1

    KPA Ltd, Raanana, Israel; University of Turin, Italy

  2. 2

    NYU-Poly, Center for Risk Engineering, New York, USA

  3. 3

    KPA Ltd, Raanana, Israel

  4. 4

    College of Management, Academic Studies, Rishon Lezion, Israel

Author Information

  1. 1

    KPA Ltd, Raanana, Israel; University of Turin, Italy

  2. 2

    NYU-Poly, Center for Risk Engineering, New York, USA

  3. 3

    KPA Ltd, Raanana, Israel

  4. 4

    College of Management, Academic Studies, Rishon Lezion, Israel

Publication History

  1. Published Online: 19 AUG 2010
  2. Published Print: 22 OCT 2010

ISBN Information

Print ISBN: 9780470747483

Online ISBN: 9780470972571

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Keywords:

  • balanced scorecards;
  • loss distribution approach (LDA);
  • operational risk management (OpR);
  • scenario analysis

Summary

Operational risks include most of what can cause an organization harm, that is foreseeable and, to a very large extent, avoidable — if not the events themselves, then at least their impact on the organization. Operational risk management (OpR) is the collection of tools, procedures, assets and managerial approach that are all aimed together at one goal: to understand the operational risks facing the enterprise, to decide how to deal with them and to manage this process effectively and efficiently. Operational risks are characterized by two statistical measures related to risk events: their severity and their frequency. In order to be able to assess and manage risk, it must be measured. The chapter introduces three operational risk measurement techniques: the loss distribution approach (LDA), scenario analysis and balanced scorecards.

Controlled Vocabulary Terms

probability distribution; statistical measures