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Considerations Regarding Operational Risk Management in the Context of the Basel II Agreement

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Author(s): Ioan Trenca | Iulia Neag

Journal: The Romanian Economic Journal
ISSN 1454-4296

Volume: XIII;
Issue: 36;
Start page: 171;
Date: 2010;
Original page

Keywords: operational risk | risk management | Basel II | baisc indicator approach | standardized approach.

ABSTRACT
The main purpose of the present paper is to provide an analysis of the operational risk from the perspective of the financial institutions in Romania exposed to this cathegory of risk in the context of the Basel II Agreement. The first part of the study describes a theoretical background based on the recent specialized literatureregarding the concept of the operational risk. The second part presents an analysis of the operational risk under the basic indicator approach, the standardized approach and the advanced measurement approach, suggesting the necessity of adequate capital requirements for the appropriate functionning of the bank’s activity.The most relevant results of the analysis insist on the importance ofidentifying, measuring and modelling operational risk and the benefits of continuously improving the instruments, methodology and technics of operational risk management. The conclusions of the work are related to the fact that operational risk management is a necessity in the context of the new challenges of the contemporaryworld and it requies advanced methods in order to effectively contribute to the development of the banking activity.
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