| Summary: | 碩士 === 元智大學 === 管理研究所 === 98 === The Basel II Accord issued on July 2004 does not only standardize the Credit and Market Risk, but also bring the Operational Risk into the calculation of Capital Adequacy Ratio. Since the Operational Risk is the newly added item of the Basel II Accord and covers quite extensively, this research will describe the definition of Operational Risk and the application and assessment of its management tools, except for introducing the regulated methods of capital calculation for Operational Risk
This research applies the “Archival Research method “ to study the assessment of Operational Risk which Basel II set to financial institutions , discussing the two reports- “Results from the 2008 Loss Data Collection Exercise for Operational Risk”, and “Observed range of practice in key elements of Advanced Measurement Approaches(AMA)”-which were published on June 2009 by Bank for International Settlements. We discuss how foreign banks collect loss data and apply the AMA, providing the required columns when collecting loss data and the consulting basis when adopting the AMA for domestic financial institutions.
Operational Risk is mainly caused by people, inappropriate operational process/management, system failure or external events. Among these four reasons, people and inappropriate internal process/management account most of operational risk events. Therefore, banks should have a thorough understanding of the Operational Risk to discover the failure of operational processes and the change of risks in time. Only through this can banks control the risk within a tolerated level. As a result, banks have to adopt precautionary measures and continuous monitoring to minimize the frequency and seriousness of losses, and keep following if the adopted measures are effective in order to prevent similar events from happening again.
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