model - manage - mitigate

Historical loss data contains no information on todays risks



Risk optimization is not sufficiently enabled with by methods currently in use

At the latest since the introduction of the new Basel II regulation the management of operational risk has become a core topic of global Banking. The new Basel Capital Accord requires financial service institutes to identify, quantify and manage their operational risks. Apart from the banking world there are many other industries in which nowadays the management of operational risk is regarded as an important task for top management.

In practice, there are several challenges to effective management of operational risks: from insufficient data to apply common statistical methods over uncertainty regarding the choice of the right methodology to mathematical problems with the exact quantification of the risks.

Most of the models which are currently in use are completely based on historical loss data. Considering the constant change of technology and organizational structures this data is not a good base to quantify the operational risks of today. Also, the interdependencies and causal relations between the risks are not taken into account.

Therefore the validity of the methods which have been used until today is insufficient. A proactive, future oriented management of operational risks and the optimization of business processes and infrastructures under the aspect of operational risk are supported insufficiently by these methods.