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Reputational And Operational Risks In European Banks

Author

Listed:
  • Roxana HERGHILIGIU

    (Alexandru Ioan Cuza University of Iasi, Romania)

  • Vasile COCRIȘ

    (Alexandru Ioan Cuza University of Iasi, Romania)

Abstract

In the past 20 years operational and reputational risk has become more intriguing due to the public scandals of rogue tranding in banks like Barings Bank, Allied Irish Banks, Enron. The purpose of this study is to find the connections between operational risk and reputational risk. Our research shows that there may be a loss of reputation due to operational loss events. Moreover, every type of operational risk, from internal fraud, external fraud, legal and liability losses, processing errors, information security breaches, inappropriate business practice, physical security breaches conduct to a loss of reputation. The limitations of this paper are represented by the fact that do not have enough data to show the real impact of the reputation risk to the financial results of the European Banks.

Suggested Citation

  • Roxana HERGHILIGIU & Vasile COCRIȘ, 2014. "Reputational And Operational Risks In European Banks," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 4, pages 575-578, July.
    • Handle: RePEc:cmj:seapas:y:2014:i:4:p:575-578
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    References listed on IDEAS

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    1. Gillet, Roland & Hübner, Georges & Plunus, Séverine, 2010. "Operational risk and reputation in the financial industry," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 224-235, January.
    2. Cummins, J. David & Lewis, Christopher M. & Wei, Ran, 2006. "The market value impact of operational loss events for US banks and insurers," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2605-2634, October.
    3. Judy Larkin, 2003. "Strategic Reputation Risk Management," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-51141-5.
    4. Sturm, Philipp, 2013. "Operational and reputational risk in the European banking industry: The market reaction to operational risk events," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 191-206.
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    Cited by:

    1. Dervis Kirikkaleli & Pelin Yaylali & Okan Veli Safakli, 2020. "The Perception and Culture of Operational Risk in the Banking Sector: Evidence From Northern Cyprus," SAGE Open, , vol. 10(4), pages 21582440209, October.

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    More about this item

    Keywords

    Operational risk; Reputational risk; Banks; Losses; Basel Committee;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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