Title: Mastering Operational Risk Management Literature Reviews Made Easy

Welcome to our comprehensive guide on navigating the intricacies of writing a literature review on
operational risk management. Crafting a literature review is an essential component of any research
endeavor, offering a panoramic view of existing scholarly works relevant to the topic at hand.
However, delving into the realm of operational risk management can present its own set of
challenges, from sifting through vast amounts of literature to synthesizing diverse perspectives into a
cohesive narrative.

The Complexity of Operational Risk Management Literature Review:

Embarking on an operational risk management literature review journey can be likened to navigating
a labyrinth of theories, methodologies, and empirical studies. The multifaceted nature of operational
risk management encompasses various domains, including finance, business, and organizational
behavior. Consequently, identifying seminal works, current trends, and gaps in the literature
demands meticulous attention to detail and a nuanced understanding of the subject matter.

The Process:

1. Defining Scope and Objectives: Begin by clearly defining the scope and objectives of your
literature review. Are you focusing on a specific aspect of operational risk management, such
as financial institutions or supply chain management? Clarifying your scope will streamline
the search process and ensure relevance.
2. Conducting a Systematic Search: Employ systematic search strategies to identify pertinent
literature. Utilize academic databases, journals, conference proceedings, and reputable
sources to gather a comprehensive pool of resources. Keywords such as "operational risk,"
"risk management," and "best practices" can serve as starting points for your search.
3. Critical Evaluation: Critically evaluate the selected literature to discern its relevance,
credibility, and contribution to the field. Assess the methodology employed, theoretical
frameworks utilized, and empirical findings presented. Identifying strengths, weaknesses,
and gaps in existing literature will inform the direction of your review.
4. Synthesis and Analysis: Synthesize the findings from the selected literature, organizing
them thematically or chronologically to elucidate patterns, trends, and discrepancies. Analyze
the divergent perspectives and theoretical debates surrounding operational risk management,
offering insights into emerging paradigms and unresolved issues.
5. Writing and Structuring: Structure your literature review in a logical and coherent manner,
adhering to academic conventions and guidelines. Begin with an introduction that
contextualizes the importance of operational risk management, followed by a systematic
review of the literature, and concluding with a summary of key findings and future research
directions.

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A lack of empirical evidence also constraints the development of quantitative models for cyber risk (
Hassani et al. 2020 ) and the estimation of its insurance coverage ( Chabrow 2012 ). In order to
achieve the objective of the study, data were extracted from annual reports and accounts of fifteen
(15) deposit money banks quoted on the Nigerian stock exchange, the period covered in the study is
2012-2016. The board of directors should establish, approve and periodically review the Framework.
Please support our site to help us provide quality content consistently. Such models neither
effectively manage operational risk nor resolve problems in this discipline. The importance of
Insurance and Actuarial Science education in our current st. Gout, Urate, and Crystal Deposition
Disease (GUCDD). In particular, our results show that, even though a broad spectrum of articles can
be found on operational risk by financial institutions, the aforementioned themes that serve as the
cornerstone of and provide motivation for this study are worth discussing. The methods set out by
BCBS help the Islamic banks determine their capital in order to absorb. The likelihood is described in
different units such as once every 10 years, once every hundred times, once every 24 hours, etc.
Izhar (2010), internally inflicted operational risks are any intended acts to defraud, misappropriate
property or. In the second step, we obtained an understanding of ST approaches and their
applications in banking ORM studies via a literature review. A possible explanation for the latter
might be the damage to banks’ market value and reputation arising from the disclosure of the
operational risk events, as shown in the previous section. The second largest subcategory includes
almost 20% of all collected articles that study qualitative approaches to supervising financial
institutions considered under Pillar II. This is done by the experts in the field to which the risk
belongs. We call for an interdisciplinary research team of ORM academia, SD modelers, and risk and
policy experts to contribute to the extended use of SD to understand and manage the problem of
operational risk in the banking sector. The qualitative model was developed from the researchers’
knowledge and understanding through literature review and refined based on the semi-structured
interviews with risk managers of sampling Islamic and conventional banks. This is an operational
risk that you need to identify, understand, and figure out ways to mitigate it. But the late 2000
financial crisis in US highlighted the loopholes in the Basel II framework in making the banking
sector more stable and sound. However, managers can improve the decision-making process by
incorporating risk analysis. However, the external databases discussed in this section systematically
collect losses for developed countries. The integrated capabilities of IRM enable a shift from “risk
hindsight”— using analytics to describe what went wrong and why — to “risk foresight” —
understanding what will go wrong next and how to prevent it. Impacts of variables and their
interactions in the model also need to be quantified. Since investors’ attitude towards unexpected
operational risk events occurring in a bank is shown to be severe, financial institutions are supposed
to implement internal control frameworks to identify and eliminate causes of operational risk and
therefore have a straightforward implication for practice. The risk formula: The risk formula attempts
to capture. You pay only once for using the deliverable forever. A risk that may cause little
inconvenience is rated the lowest, and risks that can result in greater loss are rated the highest. Chain
of crises in financial markets spread to other sectors see that starting. Islamic banks and conventional
banks are dealing with various banking activities. Moreover, most of these studies analyse whether
the impact of operational losses on a firm’s market value and reputation differs depending on the
event type. 14 The identified studies cover six large markets: the U.S. financial industry, the
European banking sector, U.S. and European financial institutions, the Australian banking sector and
British financial and non-financial firms. Table 2 provides details on these studies, the data and
sample period they analyse, and their key findings.
Here are several examples of AI-enabled commercial product offerings taking risk management to
new levels. Some investors will also insist that they get a board seat, so they can visibly oversee their
investments. To search for a potential interdisciplinary approach, we need keywords outside the
ORM discipline. European Journal of Investigation in Health, Psychology and Education (EJIHPE).
The single greatest advantage of ORM over traditional. We then used SD as our relevant search term
in the next step of the review. International Journal of Turbomachinery, Propulsion and Power
(IJTPP). In every decision the board makes, they must consider how it will affect their employees,
customers, suppliers, communities and shareholders. You can download this sample to go through the
steps mentioned in it and try to apply to the operational risk that is hampering the working process
of your organization. Boards must communicate clearly and in a timely manner to develop a sense of
mutual confidence and trust with their managers. International Journal of Turbomachinery,
Propulsion and Power (IJTPP). Last but not least, studies where the unit of analysis was not ORM in
the banking industry were excluded. For many businesses, that might involve paying an insurance
company to cover certain risks. Analysing the incidence of publicly disclosed operational risk events
that occurred between 1980 and 2005, they report that most operational losses can be attributed to
internal control weaknesses. Please let us know what you think of our products and services. One
such robust international regulatory framework is Basel norms, which promotes risk management
mechanism and ensures financial stability. In order to mitigate the risk of overreliance on inclusion
and exclusion criteria, we suggest the use of relevant search terms developed from the first step of
our proposed method as a strategy to collect articles that are relevant to the research question. The
author further explains that some losses due to operational risks are expected; while some others.
The benefit is catering to customers abroad and sourcing funds from other countries, but banks are
exposed to a variety of risks in global financial system. With the increase in the risk causing factor,
management procedures have also evolved to counter them. They can be extended by their synonyms
and related terms ( Rowley and Slack 2004 ). Even if there are plenty of best practices and
regulatory guidelines, practitioners view that ORM in banks is in its infancy ( Laot 2017 ) with
difficulties and challenges in identifying and estimating risk exposures ( Gardiner and Sikking 2010
). What makes an operational risk analysis so challenging is that because the breadth of operational.
This article is an open access article distributed under the terms and conditions of the Creative
Commons Attribution (CC-BY) license ( ). The aforementioned example is an illustration of a
negative spillover based on the announcements of operational risk events. However, managers can
improve the decision-making process by incorporating risk analysis. The book also examines some
specific types of operational risks that rank high on many firms' risk registers. The hazards can either
be removed completely or the risks controlled so that a larger impact is unlikely. Only Islamic
Financial Services (Excluding Islamic Insurance (Takaful) Institutions and Islamic Mutual Funds). In
Risk Management in Financial Institutions: Formulating Value Propositions.
Paper should be a substantial original Article that involves several techniques or approaches, provides
an outlook for. How can the “scientific” literature review process support researchers in developing
relevant and powerful keywords. Performance of Islamic and Conventional Banks in Pakistan (2006-
2011), a Comp. AFMC has identified it’s system safety guys as the point men for ORM Why we
need it - mishaps, cost vs. The bibliometric analysis is the quantitative technique used when the
review scope is broad. Accounts” published in Advances in Islamic Economics and Finance Volume
I, proceedings of 6th. Corporate governance gets its roots in ethical behavior and business principles,
with the goal of creating long-term value and sustainability for all stakeholders. Section 3 discusses
the results of the classification of the operational risk literature into the three pillars of the Basel
framework. Journal of Experimental and Theoretical Analyses (JETA). Studies on some economic
and effective Ion exchange Resin used as catalyst in. Operational risk is a new dimension to the list
of risks faced by the Financial Institutions. Due to the. We used Scopus to search for applications of
the five ST approaches in banking ORM studies. IRM leverages new sources of data, including
Industrial Internet of Things (IIoT) data from sensor-equipped assets and people, and advanced
analytics tools to predict what will happen next and take preventive actions accordingly. The
identified determinants can be considered business environmental and internal control factors and
serve, for risk managers, as a basis for estimating a bank’s exposure to operational risk. Please let us
know what you think of our products and services. Their product offering is a cloud-based motion
capture app based on a computer vision and Artificial Intelligence (AI) engine. Architecture: Risk
Management and Financial Stability. The second subcategory (“Other”), for which there are only
four studies, summarises topics on the determinants of operational risk reporting. The Effects of
CD20 inhibitors therapy in comparison to TNF. This is done by the experts in the field to which the
risk belongs. In order to ensure financial stability in the banking sector, banking regulators demand
that banks hold sufficient capital to support their risks. The inclusion and exclusion criteria, which
are based on the review’s focus, goals, and coverage, are generally used by researchers to identify
relevant articles. You will have access to any new updates within 12 months of purchase.
Pakhchanyan ( 2016 ) and Wei et al. ( 2018 ) presented a number of ORM studies using internal and
external operational loss databases. Basel Committee on Banking Supervision. 2021b. Climate-
Related Risk Drivers and Their Transmission Channels. In this paper, we tested our proposed
methodology by exploring the field of operational risk management (ORM) in banks. Islam prohibits
interest in all forms and manifestations, as in some other major religions, and the. Accounts. Paper
presented at the 6th International Conference at Islamic Economics, Banking and Finance, organised
by Islamic. Journal of Pharmaceutical and BioTech Industry (JPBI). Although the study was claimed
to be the first published literature that applies SD in the estimation of operational risk loss, we
viewed that SD was not appropriate for this study for two main reasons.
AI is an important enabler of IRM, but it is just one component of a total solution to transform risk
management within the context of IX. However, we hope our paper inspires researchers in both
extending and generating new research questions that encourage them to explore and discover a
rigorous and novel methodology for future banking ORM research. It includes legal risk but
excludes strategic and reputational risk ( BCBS 2003 ). The search terms for each ST approach were:
“viable systems model”, “system dynamics”, “strategic options development and analysis”, “soft
systems methodology”, and “critical systems heuristics”. They are, for example, a deviation from
standard operating procedures, noncompliance with transaction limits, and an omission in executing
monitoring activities. We’ll also give some examples of real-world IRM solutions that are reducing
risk, improving safety, and increasing productivity. The Journal of Risk Finance, Vol. 8 No.4, pp.
394-409. The process of detecting, assessing, and controlling risk. An On-Situ Study of Stability
Analysis on Slopes Using Undrained Shear Streng. In his article Rosman (2009), states that there are
many conceptual studies made on risk analysis and. Last but not least, studies where the unit of
analysis was not ORM in the banking industry were excluded. It could also make customers stop
requesting financing from Islamic banks. Operational risk incidents are so costly that society and the
responsible organization cannot afford them ( Vaughan 2005 ). Banking ORM is a complex and
uncertain system resulting from interactions between multiple stakeholders, spillover effects, and
technological advancements. You can download this sample to look at the logistics and statistics that
the analyst has developed for the organization. The combined keywords consisted of “operational
risk”, “bank”, and the search term for each of the ST approaches. Corporate governance forms the
basis for corporations to make decisions that consider many environments, including economic,
social, regulatory and the market environment. Basel Committee on Banking Supervision. 2011b.
Operational Risk—Supervisory Guidelines for the Advanced Measurement Approaches. This is done
by the experts in the field to which the risk belongs. It arises from internal and external complex
factors, including deregulation, globalization, cross-industry acquisitions, and technological
advancements ( Cetorelli et al. 2014; Moosa 2007; Cummins et al. 2006 ). It is considered one of the
most pernicious forms of risk that can contribute to numerous failures with extensive impacts on
financial institutions and global stability ( Jorion 2007 ). Yan and Wood ( 2017 ) A structural model
for estimating losses associated with the mis-selling of retail banking products The study developed a
structural model based on risk drivers and key dynamics, including resourcing cost and penalty, to
estimate operational losses associated with the mis-selling of retail banking products. The risks were
taken when Red Flag was developed. - Result: The kill ratio quickly increased to a favorable 10 to 1
or more. In practice, it is useful to classify the different. It shows that they have the identified
hazards, decided who could be harmed and how, and also shows the plan to eliminate the risks and
hazards. First, the study assumed that complaints from mis-selling products are homogeneous.
Chapelle, Ariane, Yves Crama, Georges Hubner, and Jean-Philippe Peters. 2008. Practical methods
for measuring and managing operational risk in the financial sector: A clinical study. Committees
provide regular reports to the board on the matters they're charged with handling. Note that from the
first issue of 2016, this journal uses article numbers instead of page numbers. We further identify two
databases, GOLD from the British Banker Association and DakOR, managed by the Association of
German Public Sector Banks, that are not used in previous research, but are prominently used by
various banks, suggesting possible accessibility limitations. Journal of Pharmaceutical and BioTech
Industry (JPBI).
Islamic financial institutions need to implement such policies which regulate the functions for better.
Operational Risk Management in Financial Institutions: A Literature Review. We also use third-party
cookies that help us analyze and understand how you use this website. Basel: Bank for International
Settlements, Available online: (accessed on 16 May 2022). We further identify two databases, GOLD
from the British Banker Association and DakOR, managed by the Association of German Public
Sector Banks, that are not used in previous research, but are prominently used by various banks,
suggesting possible accessibility limitations. The risk management plan should also be reviewed and
updated as necessary. In every decision the board makes, they must consider how it will affect their
employees, customers, suppliers, communities and shareholders. Every business needs to form a
well-established relationship between decision making and risk management. Any Islamic bank that
wishes to operate in a non-Muslim. A physical event such as a hurricane or pandemic could affect
business operations. Scopus SD is not appropriate for this study for two main reasons. IOSR Journals
C0611219 C0611219 IOSR Journals COMm.PAT- Printed Antenna on a Non-Conventional
Substrate for Communication COMm.PAT- Printed Antenna on a Non-Conventional Substrate for
Communication IOSR Journals Synthesis and Characterization of Resin Copolymer Derived From
Cardanol-Furfu. It also requires a high degree of situational awareness. Last but not least, we formed
our analysis and synthesis from the SLR about how and how well system dynamics had been
applied in previous studies in banking ORM. 5.1. Contributions Our study provides two main
academic contributions. Second, to the extent of our knowledge, this paper is the first systematic
review of SD applications in banking ORM. Comments and feedbacks by the anonymous referee
were useful in improving the quality of the paper. The long-term survival of an organisation depends
on the ability to manage risks. Committees provide regular reports to the board on the matters they're
charged with handling. Technological advancements, including financial technology, also create a
new complex environment for ORM. We also developed a new relevant search term which is
“system dynamics” from the key findings of our previous literature search. You will have access to
any new updates within 12 months after purchase. Comparing various estimation approaches, they
observe that generalised parametric distributions, such as a g-and-h distribution, as well as several
limit distributions under extreme value theory, such as Generalized Pareto Distribution, can be used
to estimate the fat-tailed behaviour of operational risk under the Loss Distribution Approach (LDA).
The combined keywords consisted of “operational risk”, “bank”, and the search term for each of the
ST approaches. Chapelle, Ariane, Yves Crama, Georges Hubner, and Jean-Philippe Peters. 2008.
Practical methods for measuring and managing operational risk in the financial sector: A clinical
study. A queueing system was incorporated into the model under the assumption that the complaints
will not be investigated before the trigger event. Several studies in this subgroup examine the stock
market reaction and reputational damage caused by announcements of large operational loss events.
C0611219 C0611219 COMm.PAT- Printed Antenna on a Non-Conventional Substrate for
Communication COMm.PAT- Printed Antenna on a Non-Conventional Substrate for Communication
Synthesis and Characterization of Resin Copolymer Derived From Cardanol-Furfu. The cloud-based
platform applies Natural Language Processing (NLP) algorithms to interpret and extract EHS
requirements. The new Standardized Approach (SA), which will be effective on 1 January 2023,
uses only internal data sources for operational risk capital calculation ( BCBS 2017 ). Major issues
identified for more than fifteen years but yet to be resolved support our statement that the banking
ORM discipline needs a new methodological approach.
Operational Risk ? Compare against best practices, strategic objectives and regulations. In addition, if
forward-looking operational risk data are not considered in the reserve calculation, how can banks
assure that they have enough capital for operational risk events incurred as a result of banks’ future
operations. This was the new model that was developed by the financial institutions to avoid the
occurrence of the same problem or issue again. 10. Standard Operational Risk Management Example
bcg.com Details File Format PDF Size: 387.0 KB Download Research has been conducted by two
people on the standards of an operational risk management system. In such scenarios, the business
owners make decisions based on experience, assumptions, and their judgment. In contrast it is
suggested in the literature that operational risk is firm-specific, implying the absence of a spillover
effect within the financial industry. Rosman (2009) argues that there are many other approaches for
risk identification, for instance. The year 2020 began well, and everything was going fine until
Covid-19 struck. A diverse approach to board composition is essential, bringing with it a range of
expertise, perspectives and knowledge that adequately reflect the broader concerns of various
stakeholders, shareholders and local communities. Customer Satisfaction It’s easier and cheaper to
maintain existing customers than it is to attract new customers. Studies that only mentioned the term
“system dynamics” but neither used it in their studies nor meant the SD approach were excluded. In
particular, he focuses on determinants that influence the retention of core employees, since new
employees typically still have to build relevant skills and knowledge and hence are more likely to
make mistakes. However, the industry is still in its formative stage and faces a number of challenges
that need to be. The Effects of CD20 inhibitors therapy in comparison to TNF. A Proposed
Methodology for Literature Review on Operational Risk Management in Banks. Risks. 2022;
10(5):108. However, we hope our paper inspires researchers in both extending and generating new
research questions that encourage them to explore and discover a rigorous and novel methodology
for future banking ORM research. We argued that homogeneity is the condition of SD but
complaints from mis-selling products are, indeed, distinct individuals. This is real industry experts
talking about key issues. We observed that among the five ST approaches, only SD was used in the
banking ORM study. Operational risk management is part of the business management of an
organization. Data on latent errors were collected from a large financial institution consisting of 80
organizational units in three divisions that are private, retail, and corporate banking. Nonetheless,
they have struggled to deal effectively with operational risk ( Huber and Funaro 2018 ). Such
models neither effectively manage operational risk nor resolve problems in this discipline. The
simulation model makes the analysis of large and complex models possible and efficient. Proposal
for an Implementation Methodology of Key Risk Indicators System: Cas. Second, studies in this
field contain major gaps that can possibly be resolved through an interdisciplinary approach ( Green
2000 ). Visit our dedicated information section to learn more about MDPI. Citation and literature
discussion have been the major approach of this. Major issues in this literature exist that include
controversy on the effectiveness of ORM measurement models and ORM data problems. We
described how our methodology facilitated the development of keywords for a potential
interdisciplinary approach that has the capacity to appropriately capture the complexity of ORM,
thereby enhancing the understanding and ability to resolve the problem of operational risk
effectively. Participants will be able to develop skills, which are important for mitigating loss and
managing operational risk. 5.2. Limitations Like other literature review articles, our study depends
on the reliability and accuracy of other studies. Operational Risk Management in Financial
Institutions: A Literature Review. Int. J. Financial Stud. 2016, 4, 20.