Topic 5 summary

The objective of regulation is...

• to ensure the stability of individual banks and the financial system as a whole.

Banks are required to...

• hold a minimum amount of capital against their risks; and
• have an internal framework for risk reporting.

An internal reporting framework should enable a bank to understand...

• where the risks are;
• if they are under control; and
• if corrective measures are needed.

Risk data aggregation...

• means defining, gathering and processing risk data according to the bank's risk reporting requirements
• enables the bank to measure its performance against its risk tolerance/appetite
• includes sorting, merging or breaking down sets of data

Data about operational risks are organised into...

• the range;
• the mode, median and mean;
• standard deviation;
• correlations; and
• value and risk.

• categories and sub-categories.

Risk reports typically...

• use KRIs to measure risks and changes in risk levels.

When a risk exceeds a threshold level...

• action should be taken to investigate and mitigate.

Methods of analysing risk data are becoming...

• more sophisticated with the use of data mining and data analytics.

There are a number of statistical data analysis techniques, including...

the mode, median and mean

standard deviation

correlations

value and risk

the range

Methods of analysing risk data are becoming...

• more sophisticated with the use of data mining and data analytics.