RSK4801
Assignment 4
Due 3 October 2025
, RSK4801
Assignment 04
Due 3 October 2025
Operational Risk Reporting: Case Study of Region Bank
Question 1: What is operational risk, and how should the operational risk report
be designed?
Answer:
Operational risk is the risk of loss resulting from inadequate or failed internal processes,
human factors, system deficiencies, or external events (Basel Committee on Banking
Supervision, 2011). Unlike credit or market risk, it arises from everyday operational
activities and is often unpredictable, encompassing areas such as fraud, cyberattacks,
technological disruptions, regulatory non-compliance, and environmental shocks
(Chernobai, Jorion, & Yu, 2011).
For Region Bank, the operational risk report should serve as both a compliance
instrument and a decision-making tool for stakeholders. A robust design would include
the following sections:
1. Executive Summary – Concise overview of key operational risks, significant
incidents, and critical mitigation outcomes.
2. Introduction – Purpose, scope, and integration with the Bank’s governance,
ESG, and financial reports.
3. Risk Environment – Analysis of macroeconomic, social, and climate contexts
shaping operational risk post-COVID-19.
Assignment 4
Due 3 October 2025
, RSK4801
Assignment 04
Due 3 October 2025
Operational Risk Reporting: Case Study of Region Bank
Question 1: What is operational risk, and how should the operational risk report
be designed?
Answer:
Operational risk is the risk of loss resulting from inadequate or failed internal processes,
human factors, system deficiencies, or external events (Basel Committee on Banking
Supervision, 2011). Unlike credit or market risk, it arises from everyday operational
activities and is often unpredictable, encompassing areas such as fraud, cyberattacks,
technological disruptions, regulatory non-compliance, and environmental shocks
(Chernobai, Jorion, & Yu, 2011).
For Region Bank, the operational risk report should serve as both a compliance
instrument and a decision-making tool for stakeholders. A robust design would include
the following sections:
1. Executive Summary – Concise overview of key operational risks, significant
incidents, and critical mitigation outcomes.
2. Introduction – Purpose, scope, and integration with the Bank’s governance,
ESG, and financial reports.
3. Risk Environment – Analysis of macroeconomic, social, and climate contexts
shaping operational risk post-COVID-19.
