Scenario Analysis for Basel Ii Operational Risk Management

Companies have an obligation to protect their customer’s information, which goes beyond that of complying with state and federal regulations. If the company loses the trust of their customers, they risk the chance of damaging

Basel III is a regulatory reform measures to improve the banking regulation, supervision and risk management. Basel III was published in 2009 and mainly because of widespread of credit crisis of global banking system. Therefore, the banks must maintain sufficient capital and proper leverage at any point in time. We also know that Basel III is implemented right after Basel I and II, its main changes are to enhance the stability of banking system when facing financial crisis and economic downturn. Apart from that, the content of banks’ risk management and transparency are also strengthened. The volatility of banking system can thus be reduced through strictly enforced Basel III standard and requirements.

Basel III is a global comprehensive collection of restructured regulatory standards on bank capital adequacy and liquidity. It was developed by the Basel Committee on Banking Supervision to strengthen the regulation, supervision and risk management of the banking sector (bis.org, 2010). It introduces new regulatory requirements on bank liquidity and bank leverage in response to the financial downturn caused by the Global Financial Crisis. Stefan Walter, Secretary General of the Basel Committee on banking supervision said in November 2010:

Mason Financial LLC is a large company that is built on handling of personal data. As the company performs its operations on a network and over the Internet, it is exposed to a plethora of information security risks. Insurance and financial records are a prime target of hackers the world over. As the company stocks volumes and volumes of such personal information, it paves way for hackers and other fraudsters to commit insurance scams. Digital information makes it easier to monetize operations and it is always hard to track. There is the need for all stakeholders handling such sensitive personal information assets to be aware of security implications, monitor their personal credit cards and banking information besides consumers remaining

Credit risk consists of three parts: the size of the exposure at the time of default, the probability of default occurring, and the loss if the credit event occurs (Fraser & Simkins, 2010). Undoubtedly, a combination of a clear strategy, a knowledge of analytical tools, an understanding of the risk management instruments, responsible oversight, and the ability to be intuitive is crucial to risk management (Bethel, 2016). Wells Fargo is one of the most successful banks in the United States in managing risk. Successfully, they have navigated through risk by choosing a course of action determined by their risk management process (Perez, 2014).

Since the onset of the financial crisis 2008, the sovereign debt crisis in western economies and the new financial regulation with Basel III coming up, the financial industry faces the challenge of reinventing itself. The ring-fence for Commercial and Investment Banking, and new economic and regulatory capital requirements will determine the kinds of products banks will be able to distribute. It will have a huge impact in the Investment Banking business, which will suffer tough regulation and supervisory procedures. At the same time, credit risk models will be reviewed because they have failed to predict the crisis of 2008. The current financial and economic crisis doesn’t have any precedent in the past.

But rather must perform comprehensive financial and economic analysis to ascertain the risk involve and the level they can take (Murray & Andrew, 1998: Chartered Institute of Bankers, 2015; 1994; Ishola,

In recent years breaches in data security have become common place. When breaches occur, a consumer’s personal and financial information are put at risk. Cyber criminals most frequently target retailers that make a practice of storing a customer’s credit card information beyond the necessary time frame and in many cases do have in the place appropriate security protocols.

Perhaps a serious shortcoming with this approach is the inability to evaluate both steps lacking sufficient data. For instance, the SRA might notice a new kind of fraud emerging but the organization’s knowledge of such impact is limited. If a risk is hard to measure, it is frequently said to be ‘instability’ instead of 'risk '. Therefore, the SRA manages risk that is mostly "instabilities" in a technical sense.

Businesses are becoming ever more dependent on digital information and electronic transactions, and as a result face stringent data privacy compliance challenges and data security regulations. With the enterprise increasingly under threat of cyber attacks and malicious insiders, business applications and networks are now dependent on the use of digital credentials to control how users and entities access sensitive data and critical system resources.

Our corporations, and even government agencies, continue to demonstrate the variation in defense and mitigation techniques, as we are more or less unsurprised when another company reports an erroneous amount of stolen credit card and banking data. Indeed, our visage of unconditional safety is leaving us vulnerable on the cusp of another internet revolution.

Cyber-Security risk will only increase in importance and require ever greater resources. As a Financial institution we store an increasing amount of data about their customers, the exposure to cyber-attacks is likely to further grow so we have to make protection against cyber-attacks one of our top strategic priority (The future of Bank Risk Management, 2016).

product of my scholarly work. Any inaccuracies of fact or faults in reasoning are my own, and

After several months of hard work our thesis has been finished. Now it is time to thank everyone

The rationale of Basel II was to reduce the scope for regulatory arbitrage and make regulatory capital requirements more risk-sensitive by incorporating advances made in banks‟ internal risk management practices in calculating regulatory capital requirements. The „International Convergence of Capital Measurement and Capital Standards: A revised Framework‟, known as Basel II, was agreed in 2004 and consisted of three pillars corresponding to minimum regulatory capital requirements in Pillar 1, the supervisory review process in Pillar 2 and market discipline in Pillar 3.