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Operational risk management in financial institutions
(naslov ne postoji na srpskom)
aPrivredna banka Beograd a.d., Beograd
bBelgrade Business School, Belgrade

Ključne reči: Operational risk; financial crisis; loss; heterogeneousness; volatility; model risk; moral hazard
(ne postoji na srpskom)
The current economic crisis and a great number of individual examples indicates that the cumulative operational risks in the financial industry cause domino effects, which can lead financial institutions to the zone of extreme losses, or even to bankruptcy. Furthermore, operational risks are heterogeneous and very complex and can generate disproportionately high losses, since they interact with other risks (multiplying their effects). In the conditions of the global financial crisis, operational risk becomes a dominant risk. Additionally, the cumulative operational risks can act independently or supplementary as the cause of crisis in the financial system. This has been proved during the last couple of decades both in Serbia and in the broader area of the Central and Southeast Europe. The experience so far has confirmed that current statistical and mathematical methods for measuring VaR have not yielded the expected results, especially from the aspect of valid and precise risk assessment. Internal and external events that initiate operational risks are very specific and unpredictable. That is why VaR has to be adjusted, although it is a standard risk measure in the deposit financial institutions. Accordingly, the paper provides the alternative solutions for the projected risk models in order to calculate the events of low or middle value, i.e., to envisage the probabilities for the external events in order to absorb, or to efficiently manage the risks.
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Wang, T., Hsu, C. (2013) Board composition and operational risk events of financial institutions. Journal of Banking & Finance, 37(6): 2042-2051
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O članku

jezik rada: engleski
vrsta rada: neklasifikovan
objavljen u SCIndeksu: 02.09.2013.

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