Basel III regulation intent is to increase the resiliency of banks through effective risk management practices that can reduce significant idiosyncratic operational losses. A systemic risk event that leads to significant losses in a bank holding company (BHC) can expose them to become insolvent...

How does business complexity affect risk management in financial institutions? The commonly used risk measures rely on either balance-sheet or market-based information, both of which may suffer from identification problems when it comes to answering this question. Balance-sheet measures, such as...

Using supervisory operational loss data of the U.S. banking industry, we analyze correlations among operational losses within banks and across banks. We find evidence of relatively high correlations among tail losses of different operational risk types within banks. The median of these...

This study documents the association between the quality of risk management practices and operational loss realizations at large financial institutions in the United States. Using detailed supervisory data, we find that companies with weak risk management practices experience higher and more...

A one-stop guide for the theories, applications, andstatistical methodologies essential to operational risk Providing a complete overview of operational risk modeling andrelevant insurance analytics, Fundamental Aspects of OperationalRisk and Insurance Analytics: A Handbook of Operational...

Recent regulatory proposals tie a financial institution's systemic importance to its complexity. However, little is known about how complexity affects banks' risk management. Using the 1996-1999 deregulations of U.S. banks' nonbanking activities as a natural experiment, we show that banks'...