Identification of Key Operational Risk Indicators for Banks

The aim of this article is to indetify what operational risk in banking institutions entails and to identify the various firm-wide key operational risk indicators in a typical South African retail bank. This article includes both internal and external operational risk events in the definition of operational risk. To indentify firm-wide operational risk indicators, questionnaires were completed by managers of the different divisions of a South African bank. The exploratory factor analysis identifies three factors, or categories of risk indicators, namely firm-wide employee risk indicators, firm-wide system risk indicators and firm-wide business control risk indicators.