The market reaction to operational risk events in the energy sector

Sofia Kalatha (), Panagiotis Dontis-Charitos (), Kyriaki Kosmidou () and Kostas Andriosopoulos ()
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Sofia Kalatha: Aristotle University of Thessaloniki
Panagiotis Dontis-Charitos: ESCP Business School
Kyriaki Kosmidou: Aristotle University of Thessaloniki
Kostas Andriosopoulos: Audencia Business School

Annals of Operations Research, 2025, vol. 347, issue 1, No 24, 631 pages

Abstract: Abstract Despite the growing importance of operational risk, little is known about the impact of operational losses on the stock prices of energy firms. We fill this void by examining the market reaction of energy firms to a unique international sample of 452 operational loss events announced between 1996 and 2021, constructed using the SAS OpRisk Global Data database. Our results reveal negative and significant abnormal returns following the announcement of operational losses, while further analysis shows that results vary with event and/or announcing firm characteristics. Our evidence can help inform multiple stakeholders in the energy industry in the pricing, asset allocation, and risk management functions, as well as help regulators design effective mechanisms to mitigate the impact of operational losses on the economy and society.

Keywords: Operational risk; Operational losses; Energy companies; Event study (search for similar items in EconPapers)
JEL-codes: G14 G32 Q49 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10479-023-05488-y

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