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Later on, the borrower defaulted on payments and the bank filed a suit for recovery, claiming interest at the rate of 10.5% p.a. During defense, arguments in the court, the borrowers countered that he agreed rate of interest was 1.5% p.a. and not 10.5% p.a. as claimed by he bank. In support of their claim, they produced the statement of account from the bank, showing the interest rate as 1.5% p.a.

Identified risk creators in this example are:

* System (not recording interest properly)

* People (not verifying all related documents before filing the suit)

5. Model Bank had one of its branches in Ideal Town in a state capital. Resourceful business people had maintained their accounts with the bank and this had turned out to be quite profitable for the bank. The management of the bank, in their endeavor to increase the size of their business, shifted the bank's branch to a more spacious building at a location that was a bit distant from Ideal Town. Soon after, many of their valued customers shifted their accounts to other banks having branches that were in Ideal Town or closer to it.

Within a year, Model Bank's branch showed operational loss as against profits earned since inception, owing to loss of remunerative customer accounts.

Identified risk creators in this example are

* People (lack of foresight of top management in assessing the consequences of shifting to a new location)

* Strategic risk (inappropriate decision leading to a shrinkage in value of business, resulting in operational loss)

Findings and Analysis

6.1. Cause-Event-Effect Analysis on Operational Risks

Operational risk is in involuntary spectrum of the functioning of an organization- if there is existence of an organization there will be a host of activities, core and non-core each of which can be a potential source of operational risk. Hence, in the broadcast sense, the operations, functions or activities of an organization may themselves be the cause of operational risks.

‘Event-effect' follows the cause. While the causes in operational risks may be the failure of people, processes, systems or external events, an event may take various forms e.g. fraud by employees of the organization or outsiders, unintended mistakes made by the employees, etc. The effect, however, may be different, even though the cause is the same. Severity of loss will be the determining factors on effect analysis.

In cause-event-effect analysis in operational risk management, an important aspect is that as strategic and reputation risks may often significant loss-effect, they are not captured under the operational risk canvas. It is not always possible to attribute a loss effect purely to a single group of operational risk causes. “One could give several examples where loss of reputation and consequential loss of business far exceeds any direct loss and where the initial cause was a combination of circumstances where poor business judgment as well as perhaps a dose of human incompetence and even downright deception, played a role. Should these events be ignored because they do not fall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。