Ten Laws of Operational Risk: Understanding its Behaviours to Improve its Manage

Description: Ten Laws of Operational Risk by Michael Grimwade TEN LAWS OF OPERATIONAL RISK Unlike credit and market risk, operational risk currently lacks an overarching theory to explain how and why losses occur. As a result, operational risk managers have been forced to use unsatisfactory tools and processes that fail to add sufficient commercial value. In Ten Laws of Operational Risk: Understanding its Behaviours to Improve its Management, Michael Grimwade delivers an insightful discussion of the nature of operational risk and a groundbreaking redesign of the profession???s existing tools. The author???s Ten Laws are grounded on the business profiles of firms and the human and institutional behaviours that drive operational risk. They are underpinned by taxonomies for the causes; the inadequacies or failures that constitute both control failures and events; and the impacts of operational risks. Drawing on twenty-five years of first-hand experience and research, this book explains the patterns and trends that are apparent in the historical data and offers solutions to the persistent problems inherent in risk appetite, RCSAs, scenario analysis, reputational risk, stress testing, capital modeling, and insurance. It also provides fresh insights into the everyday activities of risk managers with respect to predictive key risk and control indicators, root cause analysis, why controls fail, the risks posed by change, and product risk profiles. Ten Laws of Operational Risk presents a structured and evidence-based approach to identifying emerging risks and predicting future behaviours related to pandemics, climate change, cybercrime, artificial intelligence, and machine learning. It includes revealing industry data, in-depth case studies, and real-world examples that shed light on recurring and obstinate problems in operational risk management. A must-read resource for Chief Risk Officers and other risk professionals, as well as regulators, management consultants, and students and scholars of operational risk, Ten Laws of Operational Risk provides an invaluable new, systematic, and rigorous approach to operational risk management. PRAISE FOR TEN LAWS OF OPERATIONAL RISK ???Operational Risk can no longer be described as a new concept, but as a discipline few attempts have been made to really understand its behaviour. In his book Michael does this very successfully, blending extensive practical experience with analytical thought leadership to propose a set of laws that explain why and how Operational Risks arise, and what can be done to manage them. Assertions are evidence based, with numerous real examples used to underpin his hypotheses. This is a valuable addition to Operational Risk thinking and is recommended for experienced professionals and novices alike.?????? Dr Luke Carrivick, Director of Research & Information, ORX ???Michael has established himself as one of Operational Risk???s foremost thinkers. His ability to use historical data to analyse events is unrivalled. In this must-read book, he identifies ten fundamental laws that provide every Operational Risk practitioner with a clear set of rules they can use to understand current events and predict their impacts.?????? Andrew Sheen, former Head of the FSA???s Operational Risk Review team ???Michael is one of the most prominent thinkers in Operational Risk. He combines a long career in Operational Risk management and measurement with a deep, long-standing reflection on the fundamental causes, dynamics and patterns in the manifestation of Operational Risk events. He produces, with this book, a remarkable synthesis of his insightful and innovative work.?????? Dr Ariane Chapelle, Honorary Reader, University College London; Managing Partner, Chapelle Consulting ???Michael is a highly respected expert in the field of Operational Risk, who has developed some ground-breaking frameworks for analysing this risk and guiding better risk management decisions. As a working practitioner in the field he brings many insights that will appeal to other practitioners as well as regulators, students and scholars.??? ??? Professor Elizabeth Sheedy, Macquarie Business School ???Michael???s views and analysis challenge the traditional Basel II views of Operational Risk and are genuinely thought-provoking. His book on the Ten Laws of Operational Risk will give financial services clarity and a practical view, where it has been previously lacking, on how best to manage such risks.?????? Tin Lau, Group Head of Financial and Strategic Risk, TP ICAP FORMAT Hardcover CONDITION Brand New Back Cover PRAISE FOR TEN LAWS OF OPERATIONAL RISK "Operational Risk can no longer be described as a new concept, but as a discipline few attempts have been made to really understand its behaviour. In his book Michael does this very successfully, blending extensive practical experience with analytical thought leadership to propose a set of laws that explain why and how Operational Risks arise, and what can be done to manage them. Assertions are evidence based, with numerous real examples used to underpin his hypotheses. This is a valuable addition to Operational Risk thinking and is recommended for experienced professionals and novices alike." - Dr Luke Carrivick, Director of Research & Information, ORX "Michael has established himself as one of Operational Risks foremost thinkers. His ability to use historical data to analyse events is unrivalled. In this must-read book, he identifies ten fundamental laws that provide every Operational Risk practitioner with a clear set of rules they can use to understand current events and predict their impacts." - Andrew Sheen, former Head of the FSAs Operational Risk Review team "Michael is one of the most prominent thinkers in Operational Risk. He combines a long career in Operational Risk management and measurement with a deep, long-standing reflection on the fundamental causes, dynamics and patterns in the manifestation of Operational Risk events. He produces, with this book, a remarkable synthesis of his insightful and innovative work." - Dr Ariane Chapelle, Honorary Reader, University College London; Managing Partner, Chapelle Consulting "Michael is a highly respected expert in the field of Operational Risk, who has developed some ground-breaking frameworks for analysing this risk and guiding better risk management decisions. As a working practitioner in the field he brings many insights that will appeal to other practitioners as well as regulators, students and scholars." - Professor Elizabeth Sheedy, Macquarie Business School "Michaels views and analysis challenge the traditional Basel II views of Operational Risk and are genuinely thought-provoking. His book on the Ten Laws of Operational Risk will give financial services clarity and a practical view, where it has been previously lacking, on how best to manage such risks." - Tin Lau, Group Head of Financial and Strategic Risk, TP ICAP Flap PRAISE FOR TEN LAWS OF OPERATIONAL RISK "Operational Risk can no longer be described as a new concept, but as a discipline few attempts have been made to really understand its behaviour. In his book Michael does this very successfully, blending extensive practical experience with analytical thought leadership to propose a set of laws that explain why and how Operational Risks arise, and what can be done to manage them. Assertions are evidence based, with numerous real examples used to underpin his hypotheses. This is a valuable addition to Operational Risk thinking and is recommended for experienced professionals and novices alike." - Dr Luke Carrivick, Director of Research & Information, ORX "Michael has established himself as one of Operational Risks foremost thinkers. His ability to use historical data to analyse events is unrivalled. In this must-read book, he identifies ten fundamental laws that provide every Operational Risk practitioner with a clear set of rules they can use to understand current events and predict their impacts." - Andrew Sheen, former Head of the FSAs Operational Risk Review team "Michael is one of the most prominent thinkers in Operational Risk. He combines a long career in Operational Risk management and measurement with a deep, long-standing reflection on the fundamental causes, dynamics and patterns in the manifestation of Operational Risk events. He produces, with this book, a remarkable synthesis of his insightful and innovative work." - Dr Ariane Chapelle, Honorary Reader, University College London; Managing Partner, Chapelle Consulting "Michael is a highly respected expert in the field of Operational Risk, who has developed some ground-breaking frameworks for analysing this risk and guiding better risk management decisions. As a working practitioner in the field he brings many insights that will appeal to other practitioners as well as regulators, students and scholars." - Professor Elizabeth Sheedy, Macquarie Business School "Michaels views and analysis challenge the traditional Basel II views of Operational Risk and are genuinely thought-provoking. His book on the Ten Laws of Operational Risk will give financial services clarity and a practical view, where it has been previously lacking, on how best to manage such risks." - Tin Lau, Group Head of Financial and Strategic Risk, TP ICAP Author Biography MICHAEL GRIMWADE has over 25 years experience in operational risk management. He is Head of Operational Risk at ICBC Standard Bank and is the author of Managing Operational Risk: New Insights and Lessons Learnt. He is a former Director of the Institute of Operational Risk, and has previously held senior operational risk roles at LBG, RBS and MUFG Securities. Table of Contents About the Author x Introduction xii Part 1 Ten Laws of Operational Risk (Grimwade, 2020) 1 Chapter 1 Patterns in the Behaviour of Operational Risk 5 Chapter 2 The Occurrence and Severity of Loss Events 15 Chapter 3 Concentration and Systemic Operational Risk Events (SOREs) 51 Chapter 4 Homeostasis, Risk Transference, Transformation and Conservation, and Active Risk Taking 63 Chapter 5 Three Taxonomies: Inadequacies or Failures, Impacts and Causes 75 Chapter 6 Conclusions – How and Why 97 Part 2 Operational Risk Management Tools Designed for Success 115 Chapter 7 Defining and Cascading Operational Risk Appetites 119 Chapter 8 Risk & Control Self-Assessments 135 Chapter 9 Scenario Analysis 147 Chapter 10 Operational Risk Capital Modelling 165 Chapter 11 Stress Testing 181 Chapter 12 Reverse Stress Testing and the Transfer of Risks via Insurance 211 Chapter 13 Day-to-Day Operational Risk Management 229 Chapter 14 Conclusions 267 Part 3 Predictions of the Future Behaviours of Operational Risk 275 Chapter 15 Identifying Emerging Risks 277 Chapter 16 Predictions of the Future Behaviours of Operational Risk in Response to Four Emerging Threats 283 Part 4 Conclusions 329 Chapter 17 Conclusions and Operational Risk Strategy 331 Appendices Appendix I Taxonomy of Inadequacies or Failures: Events and Control Failures 349 Appendix II Impact Taxonomy and Their Relative Scales and Velocities 359 Appendix III Causal Taxonomy Based Upon a Review of Large, Well-Documented Events 363 Appendix IV Risk Taxonomies for Cybercrime and IT Operational Risks Based on Analysis of Actual Loss Events 369 Glossary 377 Bibliography 381 Index 387 Details ISBN1119841356 Publisher John Wiley & Sons Inc Year 2021 ISBN-10 1119841356 ISBN-13 9781119841357 Format Hardcover Imprint John Wiley & Sons Inc Place of Publication New York Country of Publication United States Series Wiley Finance Pages 416 Publication Date 2021-12-30 UK Release Date 2021-12-30 NZ Release Date 2022-01-04 Subtitle Understanding its Behaviours to Improve its Management Author Michael Grimwade DEWEY 658.155 Audience Professional & Vocational US Release Date 2021-12-30 AU Release Date 2021-12-29 We've got this At The Nile, if you're looking for it, we've got it. 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