11 November 2003

Getting Traction with KRIs: Laying the Groundwork

Getting Traction with KRIs: Laying the Groundwork

by Charles Taylor and Jonathan Davies

This article summarizes insights on the incidence of operational risk gleaned from Part I of the KRI Framework Study and discusses the direction of future work.

In recent years, a good deal of the focus in operational risk in large banks has been on quantifying risks and losses as precisely as possible. Behind much of this effort has been the Basel II requirement that by 2007 banks should be able to estimate how much capital they need to hold against their operational risks.

More recently, the banking industry has begun to devote attention to improving tools used in hands-on management of risks and, as a part of that effort, more scrutiny has been given to 'indicators' of areas of higher risk and loss"

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