How many loss events Type 1 are defined by Basel 2?
In this part, banks are asked to provide aggregate loss data by loss event type, based on 7 level 1 types of loss event and 8 business lines.
What are the seven event types of operational risk?
The BIS II proposals specify the following 7 operational risk events: internal fraud, external fraud, employment practices and workplace safety, clients, products and business practices, damage of physical assets, business disruption and system failures, execution, and delivery and process management.
What are the 3 pillars of Basel?
The Basel II Accord intended to protect the banking system with a three-pillared approach: minimum capital requirements, supervisory review and enhanced market discipline.
Which are the main categorization of operational risk?
There are five categories of operational risk: people risk, process risk, systems risk, external events risk, and legal and compliance risk. Process Risk – Process risk is the risk of financial losses and negative social performance related to failed internal business processes within every aspect of the business.
What are the three risk categories?
Risk and Types of Risks: There are different types of risks that a firm might face and needs to overcome. Widely, risks can be classified into three types: Business Risk, Non-Business Risk, and Financial Risk.
What are the types of software failure?
The software failure can be classified as: Transient failure: These failures only occur with specific inputs. Permanent failure: This failure appears on all inputs. Recoverable failure: System can recover without operator help.
Does the presence of errors in software always lead to system failures?
However, the presence of errors in the software does not always lead to system failures. System failures are very critical and also their recovery is costly because they sometimes also affect the software, most of the times damaging the hardware completely.
What are the different business lines under Basel II?
According to Basel II, all activities of the entity are mapped in a mutually exclusive and jointly exhaustive manner in one of eight business lines: Mergers and acquisitions, underwriting, privatisations, securitisation, research, debt (government, high yield), equity, syndications, IPO, secondary private placements
What are the risks of software reliability upgrades?
For reliability upgrades, it is likely to incur a drop in software failure rate, if the objective of the upgrade is enhancing software reliability, such as a redesign or reimplementation of some modules using better engineering approaches, such as clean-room method.