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Considerations Regarding Operational Risk Management in the Context of the Basel II Agreement

Author

Listed:
  • Ioan Trenca

    (Babes-Bolyai University, Cluj-Napoca, Romania)

  • Iulia Neag

    (Babes-Bolyai University, Cluj-Napoca, Romania)

Abstract

The main purpose of the present paper is to provide an analysis of the operational risk from the perspective of the financial institutions in Romania exposed to this cathegory of risk in the context of the Basel II Agreement. The first part of the study describes a theoretical background based on the recent specialized literature regarding the concept of the operational risk. The second part presents an analysis of the operational risk under the basic indicator approach, the standardized approach and the advanced measurement approach, suggesting the necessity of adequate capital requirements for the appropriate functionning of the bank’s ac-tivity. The most relevant results of the analysis insist on the importance of identifying, measuring and modelling operational risk and the benefits of continuously improving the instruments, methodology and technics of operational risk management. The conclusions of the work are related to the fact that operational risk management is a necessity in the context of the new challenges of the contemporary world and it requies advanced methods in order to effectively contribute to the development of the banking activity.

Suggested Citation

  • Ioan Trenca & Iulia Neag, 2010. "Considerations Regarding Operational Risk Management in the Context of the Basel II Agreement," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 13(36), pages 171-185, June.
  • Handle: RePEc:rej:journl:v:13:y:2010:i:36:p:171-185
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    File URL: http://www.rejournal.eu/sites/rejournal.versatech.ro/files/articole/2010-06-01/2133/je36-treanca-neag.pdf
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    References listed on IDEAS

    as
    1. Andreas A. Jobst, 2007. "It's all in the data – consistent operational risk measurement and regulation," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 15(4), pages 423-449, November.
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    More about this item

    Keywords

    operational risk; risk management; Basel II; baisc indicator approach; standardized approach.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other

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