The importance of generating appropriate operational risk identification, measurement and management processes in banks has increased significantly within the last few years. This trend will continue as a result of - among other reasons - implementation of new supervisory regulations stated in the New Basel Capital Accord and the UE Capital Requirements Directive. The introduction of these requirements is also associated with the increase in awareness of threats related to operational risk. According to supervisory regulations, one of the fundamental requirements concerning operational risk is the necessity to categorize operational losses properly. This article aspires to present the categorization of losses, stated in the Capital Accord, CRD, and Recommendation M of the KNB. Author uses examples of losses to demonstrate which losses should be attributed to a particular loss category. Another aim of the article is to emphasize the importance of issues associated with operational risk management in financial institutions.

Keywords: operational risk, operational losses, risk management, New Basel Capital Accord, Capital Requirements Directive.

  Maciej Piołunowicz, Categorization of Operational Losses in Banking - plik pdf; (182 KB)