The Basic Indicator Approach and the Standardised Approach to Operational Risk: An Example- and Case Study-Based Analysis

Sundmacher, Maike

doi:10.2139/ssrn.988282

Cited by 5 publications

(3 citation statements)

References 2 publications

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“…Sundmacher (2007) finds that using gross income as a proxy or risk indicator in BIA does not reflect the actual operational risk exposures. In contrast to BIA, using the STA with the same proxy for measuring operational risk capital charge has indicated the different result.…”

Section: Operational Risk In Islamic Banks: Examination Of Issuesmentioning

confidence: 98%

“…With regards to BIA, Sundmacher (2007) also employs the total revenue[20], total revenue – Australia[21] and trading income as the alternative proxies for gross income and distinguish their capability to predict the buildup in operational risk exposures. The result shows that using the bank's gross income as the proxy indicated the lowest operational risk exposures when the losses were detected in 2004.…”

Section: Operational Risk In Islamic Banks: Examination Of Issuesmentioning

confidence: 99%

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Operational risk in Islamic banks: examination of issues

Abdullah

Shahimi

Ismail

2011

Qualitative Research in Financial Markets

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PurposeThe purpose of this paper is to assess key issues in measurement and management of operational risk in Malaysian Islamic banks.Design/methodology/approachDescriptive, analytical, and comparative analyses are used to discuss the issues of operational risk in Islamic bank through the implications associated with the Islamic banks' operational risk as well as the implications on risk measurement, risk management, and capital adequacy.FindingsDiscussion on operational risk in Islamic banks is significant and becoming more complicated compared with conventional banking because of the unique contractual features and general legal environment. While basic Basel II core principles of effective banking supervision apply equally well and ideally suit the Islamic banking institutions, risk measurement, and risk management practices still need specific adaptations to Islamic banks' operational characteristics. These particularities highlight the unique characteristics of Islamic banks and raise serious concerns regarding the applicability of the Basel II methodology for Islamic banks.Research limitations/implicationsThis study has important implications for the understanding of operational risk, particularly the specific issues of the Islamic banks' operational risk that arise from the different nature of the financing and investment activities of the banks. With regard to measuring operational risk capital charge, the banks have to choose the right and effective method to ensure the operational risk capital charge will be more in line with the banks' actual risk profile and thus will provide the adequate capital and an improved buffer once the losses are announced.Originality/valueThe paper will fill the gap to the existing literature of operational risk in banking institutions especially Islamic banks, by showing the needs of specific adaption of operational risk measurement and risk management practices due to the nature of Islamic banks.

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Section: Operational Risk In Islamic Banks: Examination Of Issuesmentioning

confidence: 98%

Section: Operational Risk In Islamic Banks: Examination Of Issuesmentioning

confidence: 99%

Operational risk in Islamic banks: examination of issues

Abdullah

Shahimi

Ismail

2011

Qualitative Research in Financial Markets

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“…Pendekatan Indikator Dasar (Basic Indicator Approach) adalah pendekatan yang digunakan untuk melakukan perhitungan beban modal risiko operasional (Sundmacher, 2007). Bank yang menggunakan pendekatan ini wajib menerapkan prinsipprinsip manajemen risiko operasional yang baik sesuai dengan ketentuan Bank Indonesia.…”

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Sistem Pengendalian Risiko Operasional Pada Bank Perkreditan Rakyat Dengan Pendekatan Indikator Dasar

Sunarjo

Yuniarti

2017

Jurnal Keuangan Dan Perbankan

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BPR as the micro financial medium institution was seen as one of translation media and risk transformation. The ability of BPR in managing risk became an attention along with the increase of volume and the business operational complexity, including bank operational risk like fraud caused by people, system, or external condition. If there was no controlling, it would create loss potency for BPR itself. This research aimed to measure the loss effect because of operational risk and to identify the system of operational risk control using basic indicator approach. The population of this research was all BPR in Malang, namely 39 banks. The samples used were 20 banks. Data collection method used was observation and documentation. The research result showed that operational risk events were divided into 4 quadrants, namely Low Frequency/High Impact, High Frequency/High Impact, Low Frequency/Low Impact, and High Frequency/Low Impact. The quadrants division resulted information related to how the operational risk would be managed. Total capital charge of all BPR in Malang was IDR.4.085.114.000,00. It indicated that the total capital charge used was to anticipate the operational risk. Abstrak:BPR sebagai lembaga perantara keuangan mikro, semakin dilihat sebagai salah satu media translasi dan transformasi risiko. Kemampuan BPR dalam mengelola risiko semakin menjadi perhatian sejalan dengan peningkatan volume dan kompleksitas operasional bisnisnya, termasuk risiko operasional bank seperti fraud yang disebabkan oleh orang, sistem atau kondisi eksternal, yang apabila tidak dilakukan pengendalian menciptakan potensi kerugian bagi BPR yang bersangkutan.Penelitian ini bertujuan untuk mengukur dampak kerugian yang ditimbulkan akibat adanya risiko operasional dan mengidentifikasi sistem pengendalian risiko operasional dengan menggunakan pendekatan indikator dasar. Populasi dalam penelitian ini adalah seluruh BPR di Kota dan Kabupaten Malang yang berjumlah 39 bank. Sampel yang digunakan sebanyak 20 bank. Metode pengumpulan data dengan menggunakan observasi dan dokumentasi. Hasil penelitian menunjukkan kejadian risiko operasional terbagi dalam 4 kuadran yaitu: Low Frequency/High Impact, High Frequency/High Impact, Low Frequency/Low Impact, dan High Frequency/Low Impact. Pembagian kuadran tersebut menghasilkan informasi yang terkait dengan bagaimana risiko operasional akan dikelola. Total capital charge seluruh BPR di Wilayah Malang sebesar Rp.4.085.114.000,00, hal ini menunjukkan besar jumlah capital charge yang digunakan untuk mengantisipasi terjadinya risiko operasional.

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Operational risk capital estimation under BIA and TSA: a study of public sector and private sector banks in India

Bajaj

2015

Decision

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The Basic Indicator Approach and the Standardised Approach to Operational Risk: An Example- and Case Study-Based Analysis

Cited by 5 publications

References 2 publications

Operational risk in Islamic banks: examination of issues

Operational risk in Islamic banks: examination of issues

Sistem Pengendalian Risiko Operasional Pada Bank Perkreditan Rakyat Dengan Pendekatan Indikator Dasar

Operational risk capital estimation under BIA and TSA: a study of public sector and private sector banks in India

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