A recent peer review of sixteen major global banks found that many still lacked adequate controls and monitoring of operational risk, an area that lagged well behind the improvements made in credit and market risk management since the 2008 crisis. Speaking at a New York conference on operational risk, Mitsutoshi Adachi, chairman of the Basel Committee’s Working Group on Operational Risk (WGOR), said, “Overall banks have made progress, but much more needs to be done” in enhancing effective oversight and controls in operational risk. Citing a recent self-assessment, or peer review, by sixteen global banks, Adachi noted that operational risk posed greater challenges for banks than credit or market risk because of the “pervasiveness” of issues throughout the institution. When evaluated against the twelve principles of sound management of operational risk management from the BIS, Adachi pointed to the three areas in the guidelines where more work was needed: Principle 4: The board of
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