Publication detail

The role of insurance in operational risk mitigation – a case study

Author(s): prof. PhDr. Petr Teplý Ph.D., PhDr. Lucie Suchánková
Type: Articles in journals with impact factor
Year: 2012
Number: 0
Published in: Political Economics, Czech Republic
Publishing place: Prague, Czech Republic
Keywords: bank, Basel II, Basel III, operational risk, insurance
JEL codes: G21, G32, C15
Suggested Citation: pp.523-535
Grants: GACR 403/10/1235 (2010-2014) Institutional Responses to Financial Market Failures GACR 403/10/P278 (2010-2012) The Implications of The Global Crisis on Economic Capital Management of Financial Institutions GAUK - 31610 Alternative methods of stress testings for operational risk management
Abstract: Operational risk management has becoming more important in the fi nancial industry in the recent years mainly due to scandals in UBS in 2011 and Societé Générale in 2007. The reasons for this attention can be attributed to introduction of operational risk into the Basel II regulatory framework and to high losses stemming from operational risk events. Despite the fact that the new Basel III proposal does not give much attention to this risk, operational risk should not be underestimated. In this paper we present a theoretical background for the use of insurance in banks´ operational management according to Basel II rules. Moreover, we provide empirical analysis of the role of insurance in operational risk management in an anonymous bank located in Central Europe. We compare the results of our case study with impact studies conducted for Basel II evaluation. Based on our analysis we reject a hypothesis that insurance serves as an effective mitigation tool of operational risk in case of the researched bank.
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