Operational risk management in banks: international standarts and domestic practice

Slatvinska Maryna
Doctor of Economics, Professor of the Department of Finances, Odessa National Economic University, Odessa, E-mail:slatma81@gmail.com, ORCID ID: https://orcid.org/0000-0002-7356-1189

Cite this article:

Slatvinska M. (2022) Operational risk management in banks: international standarts and domestic practice. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Upravlinnia operatsiinym ryzykom banku: mizhnarodni standarty ta vitchyzniana praktyka; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 5-6 (294-295), pp. 35-41.

Abstract

The purpose of the article is to analyze and systematize international standards of banking business and their impact on ensuring the financial stability of the banking system. Method. Using the logical-historical method, causality and structuring method, a brief description of the international standards for operational risk management of the bank is systematized and provided, which is to shift the regulatory focus from credit and market risk to operational risk. Results of the article. The article identifies the relevance of the implementation of international standards for operational risk management of the bank in domestic practice. Emphasis is placed on the fact that views on the importance of operational risk and the need for its management have gone from absolute disregard for operational risk in determining capital to cover risks to rethinking the principles of effective operational risk management and emphasizing the need to take this risk into account when calculating capital to cover risks. The actions of the National Bank of Ukraine aimed at gradual introducing capital requirements for banks to cover operational risk are described. The main types of operational risk events that pose a threat to the bank are also described. It is emphasized that the operational risk events described in Basel II need to be complemented by data security risks, resilience risk, climate, regulatory and geopolitical risk. Scientific novelty of the article is in outlining and characterizing the problems of the existing methodology for operational risk management in domestic banks. The practical importance of the results lies in the study of transformational changes in international standards for operational risk management of the bank, as well as in the analysis of domestic practices for operational risk management of the bank.

Keywords

bank, bank operational risk, bank operational risk management, international standards for bank operational risk management, capital to cover the bank's operational risk.

JEL classification: G210, O100; DOI: 10.32680/2409-9260-2022-5-6-294-295-35-41

UD classification: 336.7

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