RSK4801
Assignment 4
Due 3 October 2025
, RSK4801
Assignment 04
Due 3 October 2025
Operational Risk Management
Operational Risk Reporting: Region Bank
Question 1 (10 Marks)
Define operational risk and compile a draft design for the operational risk report
to serve as a guideline for the risk management team responsible for drafting it.
Answer
Definition of Operational Risk
Operational risk refers to the potential for loss arising from inadequate or failed internal
processes, people, systems, or external events (Basel Committee on Banking
Supervision, 2011). Unlike credit or market risk, operational risk cuts across all business
functions and can materialize through fraud, legal exposure, cyberattacks, natural
disasters, or staff misconduct. Its pervasive nature requires a structured and disciplined
approach to management, given its ability to compromise financial performance and
institutional reputation.
Draft Design for the Operational Risk Report
To ensure clarity, compliance, and strategic alignment, the operational risk report should
adopt a structured framework. The following design is recommended as a guideline:
1. Executive Summary
➢ Key risk exposures and emerging trends.
➢ Overview of operational risk performance.
Assignment 4
Due 3 October 2025
, RSK4801
Assignment 04
Due 3 October 2025
Operational Risk Management
Operational Risk Reporting: Region Bank
Question 1 (10 Marks)
Define operational risk and compile a draft design for the operational risk report
to serve as a guideline for the risk management team responsible for drafting it.
Answer
Definition of Operational Risk
Operational risk refers to the potential for loss arising from inadequate or failed internal
processes, people, systems, or external events (Basel Committee on Banking
Supervision, 2011). Unlike credit or market risk, operational risk cuts across all business
functions and can materialize through fraud, legal exposure, cyberattacks, natural
disasters, or staff misconduct. Its pervasive nature requires a structured and disciplined
approach to management, given its ability to compromise financial performance and
institutional reputation.
Draft Design for the Operational Risk Report
To ensure clarity, compliance, and strategic alignment, the operational risk report should
adopt a structured framework. The following design is recommended as a guideline:
1. Executive Summary
➢ Key risk exposures and emerging trends.
➢ Overview of operational risk performance.
