EconPapers    
Economics at your fingertips  
 

THE TOLERANCE AND OPERATIONAL RISK APPETITE IN BANKING

Nicolae Petria, Ioan Trenca () and Simona Mutu

Revista Economica, 2012, vol. Supplement, issue 4, 618-624

Abstract: Operational risk appetite is an area that attracts differing views among practitioners. In theory, accepting any type of risk may carry some aspect of reward but it is important for operational risk practitioners to be aware of the view that this risk type differs from, for example, credit risk and market risk. Operational risks may be inherent in operational activities but are rarely intentionally sought and have no material upside in terms of return/income generation. There are, however, cost/benefit decisions involved in defining an appropriate balance between accepting potential losses on the one hand and incurring costs of mitigation on the other.In simple terms, the expression of the appetite towards the operational risk for a bank could be achieved by establishing, for each type of risk, what is acceptable, what is unacceptable and the range between these parameters is what is tolerable.In this respect, from the presented aspects in this work, we intended to create a `best practices` set to guide the concrete activities of implementing an efficient and effective management of operational risk in accordance to the risk profile adopted by the banking institution.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://economice.ulbsibiu.ro/revista.economica/arc ... nte/Volume4-2012.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:blg:reveco:v:supplement:y:2012:i:4:p:618-624

Access Statistics for this article

More articles in Revista Economica from Lucian Blaga University of Sibiu, Faculty of Economic Sciences Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No.17, postal code 550324, Sibiu, Romania. Contact information at EDIRC.
Bibliographic data for series maintained by Eduard Alexandru Stoica ().

 
Page updated 2019-09-23
Handle: RePEc:blg:reveco:v:supplement:y:2012:i:4:p:618-624