Operational Risk Management

Operational risk is the discipline most likely to collapse into a control inventory nobody reads. The Three Lines model is drawn on every slide and honoured in almost none of them, usually because the second line has been handed accountability it has no authority to enforce.

The material here is aimed at practitioners working inside that structure: the Three Lines model as it operates in practice rather than in theory, where operational and enterprise risk legitimately blur and where the boundary should hold, model risk management under SR 11-7, and what the Basel framework and the Basel III endgame rule mean for operational risk. High reliability organization thinking gets a proper treatment through the five Weick and Sutcliffe principles, and there is applied coverage of BSA/AML programs, fraud prevention and workers compensation exposure.

For indicators and thresholds see key risk indicators, for control testing see risk and control self-assessment, and for the enterprise view enterprise risk management.