{"product_id":"operational-risk-management-isbn-9781119836049","title":"Operational Risk Management","description":"\u003cb\u003eIdentify, assess, and mitigate operational risk with this practical and authoritative guide\u003c\/b\u003e \u003cp\u003eIn the newly revised second edition of \u003ci\u003eOperational Risk Management: A Complete Guide for Banking and Fintech,\u003c\/i\u003e accomplished risk executive and expert Philippa Girling delivers an insightful and practical exploration of operational risk in organizations of all sizes. She offers risk professionals and executives the tools, strategies, and best practices they need to mitigate and overcome ever-present operational risk challenges that impact business in all industries. \u003c\/p\u003e\u003cp\u003eThis latest edition includes: \u003c\/p\u003e\u003cul\u003e \u003cli\u003eInsight into how operational risk can be effectively managed and measured in today's digital banking age.\u003c\/li\u003e \u003cli\u003eUpdates on the latest regulatory guidance on operational risk management requirements in all aspects of the operational risk framework.\u003c\/li\u003e \u003cli\u003eUpdates on the new Basel II capital modeling methodology for operational risk. \u003c\/li\u003e\n\u003cli\u003eNew explorations of operational risk events in recent years including the impact of the global Covid-19 pandemic.\u003c\/li\u003e \u003cli\u003eUpdated case studies including large events at Wells Fargo, Credit Suisse and Archegos Capital Management.\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eIdeal for executives, managers, and business leaders, \u003ci\u003eOperational Risk Management\u003c\/i\u003e is also the perfect resource for risk and compliance professionals who wish to refine their abilities to identify, assess, mitigate, and control operational risk. \u003c\/p\u003e\u003cp\u003ePreface xiii\u003c\/p\u003e \u003cp\u003eAcknowledgments xv\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Definition and Drivers of Operational Risk 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Definition of Operational Risk 1\u003c\/p\u003e \u003cp\u003e2012 London Olympics: A Case Study 5\u003c\/p\u003e \u003cp\u003eOperational Risk Management and Operational Risk Measurement 9\u003c\/p\u003e \u003cp\u003eDrivers of Operational Risk Management 13\u003c\/p\u003e \u003cp\u003eKey Points 14\u003c\/p\u003e \u003cp\u003eReview Questions 14\u003c\/p\u003e \u003cp\u003eNotes 15\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 The Regulatory Push 17\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eHistory of the Basel Accords 17\u003c\/p\u003e \u003cp\u003eRules of the Accords 22\u003c\/p\u003e \u003cp\u003eAdoption of Basel II in Europe 27\u003c\/p\u003e \u003cp\u003eAdoption of Basel II in the United States 27\u003c\/p\u003e \u003cp\u003eImpact of the Financial Crisis 29\u003c\/p\u003e \u003cp\u003eBasel III 34\u003c\/p\u003e \u003cp\u003eKey Points 36\u003c\/p\u003e \u003cp\u003eReview Questions 36\u003c\/p\u003e \u003cp\u003eNotes 37\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 The Operational Risk Framework 39\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOverview of the Operational Risk Framework 39\u003c\/p\u003e \u003cp\u003eThe Foundations of the Framework 40\u003c\/p\u003e \u003cp\u003eThe Four Data Building Blocks 42\u003c\/p\u003e \u003cp\u003eMeasurement and Modeling 44\u003c\/p\u003e \u003cp\u003eReporting 44\u003c\/p\u003e \u003cp\u003eRisk Appetite 45\u003c\/p\u003e \u003cp\u003eKey Points 45\u003c\/p\u003e \u003cp\u003eReview Questions 46\u003c\/p\u003e \u003cp\u003eNote 46\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Operational Risk Governance 47\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eRole of Governance 47\u003c\/p\u003e \u003cp\u003eFirst Line of Defense 50\u003c\/p\u003e \u003cp\u003eSecond Line of Defense 51\u003c\/p\u003e \u003cp\u003eThird Line of Defense 63\u003c\/p\u003e \u003cp\u003eRisk Committees 66\u003c\/p\u003e \u003cp\u003eKey Points 68\u003c\/p\u003e \u003cp\u003eReview Questions 69\u003c\/p\u003e \u003cp\u003eNotes 69\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Culture and Awareness 71\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWinning over the Firm 71\u003c\/p\u003e \u003cp\u003eMarketing and Communication 72\u003c\/p\u003e \u003cp\u003eAgile 73\u003c\/p\u003e \u003cp\u003eTraining 75\u003c\/p\u003e \u003cp\u003ePlanning 76\u003c\/p\u003e \u003cp\u003eThe “Use Test” 82\u003c\/p\u003e \u003cp\u003eKey Points 84\u003c\/p\u003e \u003cp\u003eReview Question 84\u003c\/p\u003e \u003cp\u003eNote 84\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Policies and Procedures 85\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Role of Policies, Procedures, Guidelines, and Standards 85\u003c\/p\u003e \u003cp\u003eBest Practices 88\u003c\/p\u003e \u003cp\u003eOperational Risk Policy 88\u003c\/p\u003e \u003cp\u003eSample Operational Risk Policy 89\u003c\/p\u003e \u003cp\u003eSample Standards, Procedures, and Guidelines 95\u003c\/p\u003e \u003cp\u003eKey Points 97\u003c\/p\u003e \u003cp\u003eReview Question 97\u003c\/p\u003e \u003cp\u003eNote 97\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Internal Operational Risk Event Loss Data 99\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOperational Risk Event Data 99\u003c\/p\u003e \u003cp\u003eInternal Loss Data or Internal Operational Risk Events 100\u003c\/p\u003e \u003cp\u003eRisk Event Categories 103\u003c\/p\u003e \u003cp\u003eUsing the Basel Risk Categories 112\u003c\/p\u003e \u003cp\u003eMinimum Operational Risk Event Data Standards 113\u003c\/p\u003e \u003cp\u003eWhere Should Operational Risk Event Data Be Collected? 129\u003c\/p\u003e \u003cp\u003eWhen Should Operational Risk Event Data Be Collected? 130\u003c\/p\u003e \u003cp\u003eHow Should Operational Risk Event Data Be Collected? 130\u003c\/p\u003e \u003cp\u003eKey Points 132\u003c\/p\u003e \u003cp\u003eReview Questions 132\u003c\/p\u003e \u003cp\u003eNotes 134\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 External Loss Data 135\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eExternal Operational Risk Event Data 135\u003c\/p\u003e \u003cp\u003eSources of External Loss Event Data 136\u003c\/p\u003e \u003cp\u003eChallenges of External Data 139\u003c\/p\u003e \u003cp\u003eKey Points 147\u003c\/p\u003e \u003cp\u003eReview Question 148\u003c\/p\u003e \u003cp\u003eNotes 148\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Key Risk Indicators 149\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Risk Indicators 149\u003c\/p\u003e \u003cp\u003eSelecting Kris 153\u003c\/p\u003e \u003cp\u003eThresholds 154\u003c\/p\u003e \u003cp\u003eKri Standards 154\u003c\/p\u003e \u003cp\u003eKri Challenges 155\u003c\/p\u003e \u003cp\u003eMetrics Examples 155\u003c\/p\u003e \u003cp\u003eKey Points 161\u003c\/p\u003e \u003cp\u003eReview Question 161\u003c\/p\u003e \u003cp\u003eNote 161\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Risk and Control Self-Assessments 163\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Role of Assessments 163\u003c\/p\u003e \u003cp\u003eRCSA Methods 166\u003c\/p\u003e \u003cp\u003eRCSA Scoring Methods 169\u003c\/p\u003e \u003cp\u003eRCSA Best Practices 173\u003c\/p\u003e \u003cp\u003eKey Points 178\u003c\/p\u003e \u003cp\u003eReview Question 179\u003c\/p\u003e \u003cp\u003eNote 179\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Scenario Analysis 181\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eRole of Scenario Analysis 181\u003c\/p\u003e \u003cp\u003eScenario Analysis Approaches 183\u003c\/p\u003e \u003cp\u003eScenario Analysis Output 192\u003c\/p\u003e \u003cp\u003eKey Points 195\u003c\/p\u003e \u003cp\u003eReview Questions 195\u003c\/p\u003e \u003cp\u003eNotes 196\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Capital Modeling 197\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOperational Risk Capital 197\u003c\/p\u003e \u003cp\u003eBasic Indicator Approach 199\u003c\/p\u003e \u003cp\u003eStandardized Approach 202\u003c\/p\u003e \u003cp\u003eAdvanced Measurement Approach 208\u003c\/p\u003e \u003cp\u003eInsurance 221\u003c\/p\u003e \u003cp\u003eFuture of Capital Requirements: Basel III 223\u003c\/p\u003e \u003cp\u003eKey Points 235\u003c\/p\u003e \u003cp\u003eReview Questions 236\u003c\/p\u003e \u003cp\u003eNotes 236\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Reporting 239\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eRole of Reporting 239\u003c\/p\u003e \u003cp\u003eOperational Risk Event Reporting 241\u003c\/p\u003e \u003cp\u003eRisk and Control Self-Assessment Reporting 247\u003c\/p\u003e \u003cp\u003eKey Risk Indicator Reporting 248\u003c\/p\u003e \u003cp\u003eScenario Analysis Reporting 249\u003c\/p\u003e \u003cp\u003eCapital Reporting 249\u003c\/p\u003e \u003cp\u003eAction Tracking Reporting 250\u003c\/p\u003e \u003cp\u003eA Consolidated View 253\u003c\/p\u003e \u003cp\u003eDashboards 253\u003c\/p\u003e \u003cp\u003eKey Points 253\u003c\/p\u003e \u003cp\u003eReview Question 255\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Risk Appetite 257\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Role of Risk Appetite 257\u003c\/p\u003e \u003cp\u003eRegulatory Expectations 259\u003c\/p\u003e \u003cp\u003eImplementing a Risk Appetite Framework 264\u003c\/p\u003e \u003cp\u003eMonitoring Operational Risk Appetite 268\u003c\/p\u003e \u003cp\u003eRisk Appetite Today 272\u003c\/p\u003e \u003cp\u003eKey Points 272\u003c\/p\u003e \u003cp\u003eReview Question 273\u003c\/p\u003e \u003cp\u003eNotes 273\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Reputational Risk and Operational Risk 275\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Is Reputational Risk? 275\u003c\/p\u003e \u003cp\u003eReputational Impact 277\u003c\/p\u003e \u003cp\u003eRegulatory Oversight of Reputational Risks 283\u003c\/p\u003e \u003cp\u003eReputational Risk Management Framework 284\u003c\/p\u003e \u003cp\u003eKey Points 289\u003c\/p\u003e \u003cp\u003eReview Question 289\u003c\/p\u003e \u003cp\u003eNotes 290\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16 Operational Risk and Convergence 291\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOperational Risk as a Catalyst for Convergence 291\u003c\/p\u003e \u003cp\u003eGovernance, Risk, and Compliance (GRC) 292\u003c\/p\u003e \u003cp\u003eConverged or GRC Reporting 301\u003c\/p\u003e \u003cp\u003eKey Points 302\u003c\/p\u003e \u003cp\u003eReview Question 303\u003c\/p\u003e \u003cp\u003eNotes 303\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 17 Best Practices in Related Risk Management Activities 305\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eNew-Product Approval 305\u003c\/p\u003e \u003cp\u003eSupplier and Third-Party Risk Management 306\u003c\/p\u003e \u003cp\u003eLegal Risk Management 307\u003c\/p\u003e \u003cp\u003eRegulatory Risk Management 308\u003c\/p\u003e \u003cp\u003ePeople Risk Management 308\u003c\/p\u003e \u003cp\u003eFraud Risk Management 309\u003c\/p\u003e \u003cp\u003eTechnology Risk Management 310\u003c\/p\u003e \u003cp\u003eClimate Risk 311\u003c\/p\u003e \u003cp\u003ePandemic Planning 312\u003c\/p\u003e \u003cp\u003eStrategic Risk 314\u003c\/p\u003e \u003cp\u003eKey Points 316\u003c\/p\u003e \u003cp\u003eReview Question 317\u003c\/p\u003e \u003cp\u003eNotes 317\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 18 Case Studies 319\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eJPMorgan Whale: Risky or Frisky? 319\u003c\/p\u003e \u003cp\u003eReview Questions 324\u003c\/p\u003e \u003cp\u003eNotes 339\u003c\/p\u003e \u003cp\u003eAppendix: Answers to Review Questions 341\u003c\/p\u003e \u003cp\u003eAbout the Author 351\u003c\/p\u003e \u003cp\u003eAbout the Website 353\u003c\/p\u003e \u003cp\u003eIndex 355\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePHILIPPA GIRLING, PhD,\u003c\/b\u003e is Chief Risk Officer at Varo Bank N.A. She has over 25 years of experience in global financial services and is a recognized risk management leader who has authored two popular operational risk textbooks. She is a sought-after public speaker on enterprise risk management and digital transformation and was named as one of the decade’s “Top Fifty Faces of Operational Risk” in 2006.\u003c\/p\u003e  \u003cp\u003eBanks have worked with formalized operational risk frameworks for many years, but the banking industry’s digital transformation has given rise to new issues and entrants who require special consideration to manage their risks effectively. Modern risk executives and managers often find themselves struggling to offer assurances to senior managers of both traditional financial institutions and financial technology companies that operational risks are being effectively mitigated.\u003c\/p\u003e \u003cp\u003eIn the thoroughly updated \u003ci\u003eSecond Edition of Operational Risk Management: A Complete Guide for Banking and Fintech,\u003c\/i\u003e veteran operational risk leader Dr. Philippa Girling explores the evolution of the operational risk regulatory framework as it has responded to some of the most notorious risk events over the last decade. The book offers a revised framework containing practical steps to ensure the effective identification, assessment, monitoring, and mitigation of operational risks. \u003c\/p\u003e\u003cp\u003e\u003ci\u003eOperational Risk Management\u003c\/i\u003e provides risk professionals in banking and fintech with the tools, strategies, and best practices they need to respond to the ever-changing risk environment facing their organizations. It offers updates on the new Basel II capital modeling and risk framework methodologies for operational risk and explores new operational risk events from recent years, including the global COVID-19 pandemic. This latest edition also includes updated case studies covering significant events at DNB ASA, Credit Suisse, and Archegos Capital Management and considers the reputational fallout from the recent Australian banking scandals. \u003c\/p\u003e\u003cp\u003eFew disciplines have matured as much—or as quickly—over the past decade as the management of operational risk. Both early-career and experienced operational risk professionals will find the techniques, frameworks, and concepts found in this book invaluable for effective and efficient risk mitigation. Combining practical insights drawn from decades of experience in the industry with rigorous theory and revealing case studies, this book is a must-read for any executive, manager, or business leader responsible for containing risk.  \u003c\/p\u003e\u003cp\u003e\u003cb\u003ePRAISE FOR OPERATIONAL RISK MANAGEMENT\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e“From classical training of key concepts to tactical deployment methods, Philippa Girling navigates the nuances and complexities of operational risk management with ease and positions the practitioner to successfully implement a value-added program from the ground up.” \u003c\/p\u003e\u003cp\u003e\u003cb\u003e—Spyro Karetsos, Chief Compliance Officer, Google\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e“Basel II ushered in a new era of operational risk management and COVID-19 sealed its importance to business resiliency around the globe. Girling’s deep experience in financial services and operational risk management over these two decades brings a practitioner’s insights to effectively managing everything from GRC tools to scenario analysis. Whether you are a student of risk, senior manager or board member, \u003ci\u003eOperational Risk Management\u003c\/i\u003e is a must-read.” \u003c\/p\u003e\u003cp\u003e\u003cb\u003e—Nancy Foster, CEO, Risk Management Association\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e“Philippa Girling has provided a welcome addition to the literature about risk management in financial institutions. In addition to a thorough background on the principles involved, she is able to share the hands-on experience she has in every area of risk.” \u003c\/p\u003e\u003cp\u003e\u003cb\u003e—Kenneth Abbott, Professor, Baruch College and ex-CRO Americas, Barclays\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e“Philippa Girling has improved upon her already excellent text on operational risk in this second edition. This is a must-read for anyone seeking to build a sound operational risk management practice at their institution or improve upon an already existing program.” \u003c\/p\u003e\u003cp\u003e\u003cb\u003e—Kevin D. Oden, Managing Partner, Kevin D. 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