From Operational Risk to Operational Excellence

In this paper operational risk are considered from a purely business or profitability point of view. We show for quantifiable operational risk that the three basic figures for profitability management - value, costs and risks - can be modelled such that an integrative point of view on profitability on the value chain is possible. We then specify the general dynamic and stochastic model and consider an IT-network case study. The case study shows how neglecting the operational risk dependence structure or the that counter-measures will be taken once an operational risk event arises distort the profitability of the network. The distortion can be due to inappropriate risk figures, to exaggerated or underestimated costs or to both of them.