International and domestic experience in bank operational risk management

Gonchar Katerina
Doctor of Philosophy in Finance, Banking and Insurance, Lecturer at the Department of Banking, Odesa National University of Economics, Odesa, Ukraine, E-mail:sivkovak@ukr.net, ORCID ID: https://orcid.org/0000-0002-8350-3134

Hohulenko Nika
student of group 43, 4th year, Faculty of Finance, Banking and Insurance, Odesa National University of Economics, Odesa, Ukraine, E-mail:nika.hohulenko@gmail.com, ORCID ID:

Cite this article:

Gonchar K., Hohulenko N. (2024) International and domestic experience in bank operational risk management. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Mizhnarodnyi ta vitchyznianyi dosvid upravlinnia operatsiinyi ryzykom banku; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odesa National Economic University (ISSN 2313-4569), Odesa National Economics University, Odesa, No. 5-6 (318-319), pp. 39-46.

Abstract

The purpose of the article is to study the international and domestic experience of operational risk management in banks. The research methodology includes general scientific methods: the method of analysis and synthesis (to find out the essence of operational risk and bring about its classification); method of induction and deduction (when systematizing and generalizing the risks of banking activity), calculation and analytical method (when analyzing and calculating the minimum amount of operational risk of systemically important banks of Ukraine). The essence of operational risk is determined, which includes losses due to internal process deficiencies, employee errors, information system failures, and the influence of external factors. The latest research and publications on effective approaches to operational risk management are analyzed, including international standards and recommendations of the Basel Committee on Banking Supervision. Attention is focused on the need to adapt international standards to national conditions, taking into account the specifics of the market and regulators of each country. The main causes of operational risks are identified, including fraud, employee errors, information system failures, and imperfection of internal business processes. Effective strategies for minimizing operational risks are outlined, including the implementation of self-regulatory mechanisms and continuous improvement of processes, systems and policies. It was found that the management of operational risks is one of the key tasks for banks in the conditions of modern economic and financial instability. It has been established that effective operational risk management requires a comprehensive approach and constant updating of methods and strategies to minimize possible threats. The practical significance is confirmed by the possibility of adapting international experience and current examples of operational risk management to ensure the financial stability of domestic banking institutions. It is summarized that for effective management it is necessary to rely on both international standards and national features, constantly adapting them to changing market conditions.

Keywords

bank, operational risk; operational risk management; international standards; financial stability.

JEL classification: G210; O100; DOI: https://doi.org/10.32680/2409-9260-2024-5-6-318-319-39-46

UD classification: 336.717:005.334

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