Reputation Risk Management in Banking

Reputation risk management in banking has been prominence topic for the past decades. It has become increasingly important to quantify, manage, and evaluate the impact of operational risk in the economics of banking. Risk embedded in all the banking activities and can take various forms. For examples, it could involve individuals (human error or fraud), technique failures (interruptions in systems or technology), and internal process failures. All these will result in unexpected and substantial losses to the bank institution.

In analyzing the operation management, all banks had a well-defined risk management structure and policed. Below are the highlights of potential operational risks that each bank concerns and what operational risk strategy they had put to migrate them.

ABC has not experienced reputation risk. They had established a governance model that encompasses the organizational roles and responsibilities for a coordinated enterprise approach for the management of risk. They have l Risk Framework, which sets out the processes to identify, assess and monitor risk. They are proactively identifying and investigate corporate insurance opportunities to mitigate and reduce potential future impacts of operational risk. They had taken serious consideration on decisions between risk and reward and striking the balance between accepting potential losses versus incurring costs of mitigation. Operational risk appetite had established at the board level and cascaded throughout all the business segments to support proactive management of operational risk and transparency of risk exposures.

They had gained approval to use the Advanced Approach to manage operational risk. In order to embedded the risk culture embedded across the enterprise, they design a rotation program of more than 300 employees and executives across risk management and the operating groups. They had identified the risk of operational exposure not only cost potential losses

...