Operational risk constitutes a major risk for financial institutions post. According to Portail en ligne pour investir :If the cost of the credit risk remains very large majority (86% of the costs of Basle risk in 2014), operational risk is positioned as the second source of the most expensive risk (10%). We propose here a State of play of this risk in the major French banks, as well as its trends over the past years.
Brief reminders Basel
The calculation of own funds in respect of operational risk appeared in France at thebeginning of 2007, with the entry into force of the application of the Basel II agreements in the European area. Operational risk forming, with the credit risk and market risk, risks subject to a capital charge in respect of the “pillar I”. Three methods are available for calculating the own funds related to operational risk: and Choisor le meilleur courtier binaire on an approach basis, thestandard approach and the advanced approach (AMA), the latter being preponderant among the major players place. On the other hand we discuss here the cost of operational risk in terms of weighted assets, and not in charge of capital (which represents 8% of the weighted assets).
The place of operational risk under pillar I
If La Banque Postale introduces strongest weight of operational risk, should still measure this result on the basis of the youth of this banking institution compared to itscounterparts. Credit risk remains very majority as intrinsic to the banking activity to the general public.
After strong variations until 2012, the weight of the operational risk seems to stabilize over the last three years. The example of Société Générale, and quel strategie binaire choisir, or which the weightof the operational risk is the strongest, is stand out clearly this trend: between 2008and 2011, this share increased from 13% to 14.5% before returning to 12%. Since itstabilizes around twelve points. It goes same for other actors, on their respective levels. But more that a stabilization, there is also the reduction of the gap between themajor French banks: If in 2008 the extremes if ranged from 6.9% to 13.1% of weighted assets (i.e., a difference of more than 6%), today and since 2012, only 4% approximately between them.
The Basel accords provide cutting of operational risk in 7 categories of events that can generate a loss related to a factor of type “operational”. These positions generally have stable weight, both over time and between different actors considered here,with occasionally major events redistributing the weights. Posts ‘External fraud’, ‘ customers, products and practical commercial “and”execution, delivery and management of process”, represent the majority of operational risk. The remaining categoriesare very significant.
The three above-mentioned main positions explain between 76% and 94% of the cost of operational risk in the major French banks. The case of the NOPP on the position ‘ customers, products and practical commercial “is explained by the proceedingsby American regulators, following the embargo violations by the Bank, which led toa record fine of nearly EUR 9 billion in 2014. For comparison, the weight of this same post in the cost of the operational risk of the NOPP in 2013 was 18%.
The proliferation of subjects from regulators on operational risk says a lot about theimportance of its management. Off the “Review of the Principles for the Sound Management of Operational Risk” (BCBS 292) published end of 2014 by the Basel Committee, news around the operational risk is rich: consultation paper on Capital floors,”Revisions to the simpler approaches for Operational risk» (BCBS 291) or further refinement of the criteria for use of the AMA… And beyond the financial impact resulting from operational errors, hides an impact in terms of reputation (or even loss of approval in some cases) for banks, which can prove costly even in a context of mistrustof the public with regard to the financial industry.