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n the nature of the task performed as well as on the specific risk and control environment. Capacity, for instance, may be the main risk factor in certain back office activities while dependency on critical people may be the key risk factor in a trading front office and so on.

4. Identification of the risks: ‘What happens?' is the next question to answer, following the consequences of the failure all the way down the process (and through the related ones). The really important thing during risk identification is not to miss any risks out. You can decide to ignore some of them at a later stage, after you have assessed them, but they all need to be included at this stage. Whatever technique (or techniques) you use, it is important to provide an audit trail so that you can be sure of what happened and that no risks were omitted.

5. Identification and analysis of the losses: This is the key step, not only for future categorization and statistical analysis, but also to prioritize exposures and subsequent control actions. Although at the beginning, in the absence of a reliable database of historical losses, this task may be primarily based on management's expert judgment, it is important to ensure that the resulting estimates are then updated constantly following any operational event. Information contained in commercial databases of operational losses can be used in the development of specific scenarios for risk analysis as well as to supplement limited internal data. It could not, however, be the main basis for a statistical estimate of operational risk.

Finally, because of the swift actions normally taken to correct control weaknesses emerging from operational events, a reliable process for identification and assessment of losses must take into account the changes occurring in the risk and control environment and reflect them quantitatively in the overall estimate of operational risk.

6. Identification and analysis of KRIs. KRIs will be identified on the basis of the information gathered in the previous steps, namely the drivers, the factors and the potential losses, and ranked according to their predictive ability. KRIs should be:

* Relevant, strongly related to the frequency of operational failure and/or severity of impact.

* Non-redundant: If two indicators are strongly correlated, only one should be considered.

* Measurable: As much as possible, indicators should be objectively (and independently) quantifiable and verifiable.

* Easy to monitor: Indicator tracking should not be too cumbersome and expensive.

* Auditable: Indicators and their sources should be properly documented.

Because many different operational and financial variables can be used as risk indicators, KRIs form an absolute heterogeneous set. There are thus many different ways to classify them. The following simple classification stresses the relationship between KRIs and the two key features of an operational risk exposure: likelihood and severity.

Descriptive indicators are variables that give information about some key business dimension, such as size, volume and amounts, and can therefore be thought as somehow linked to the impact (loss本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。