Operational Risk

Operational risk (according to Basel II) is a risk of loss due to the inability or failure of internal processes, people, systems or from external events. More operational risks can also be caused by the legal risk (Regulatory and legal requirement). 
Although the definition of Operational Risk in Basel II does not include business risk, strategic risk and reputation risk, banks should include risks at the time of the RBC. 
Operational risk is the most important risks that affect our customers every day. Because of that bank to increase attention on the process, procedures and controls relating to operational risks. 
In the last 20 years, the operational risks of mismanagement have created a great loss to the bank as well as credit risk and market risk. 
Daily problem that affects every bank, among others: 
failure to reconciliation of payments made / created bank 
error transactions by trader or back office staff is a result of an error position in the market and cause problems in the bank reconciliation 
failure to balance the debit and credit received by banks 
system failure due to the computer system upgrade 
external events such as floods or power off 
Changes in the banking sector caused a change in operational risks. Incident which caused the loss is replaced by a small incident by a rare but provide a big impact (Low Frequency / High Impact). 
Therefore, Basel II requires banks to: 
Calculate / mengkuantifikasi operational risks 
Measuring operational risk 
allocate capital as credit risk and market risk 
Some of the reasons why the risk of bank operational changes: 
Automation 
Dependence on technology 
Outsourcing 
Terrorism 
Globalization 
Trader who prankish (rogue trader) 
Increase in value and volume of transactions, and 
Increase in the legal process.