EU legislation requires that institutions adequately manage and mitigate operational risk, which is defined as the risk of losses stemming from inadequate or failed internal processes, people and systems or from external events. Operational risk includes legal risks but excludes reputational risk and is embedded in all banking products and activities. It has always existed in banking, and non banking, organizations but it has acquired a greater relevance given the increased complexity and globalization of the financial system and the recent materialization of unprecedented extremely large losses. Through the publication of its guidelines and RTS on operational risk, the EBA aims at promoting and enhancing the effectiveness of operational risk management and supervision throughout the banking system.
Technical Standards, Guidelines & Recommendations