Operational risk: Measurement and modelling

In this groundbreaking working, Jack L. King, Ph.D. provides the basis for an in-depth understanding of operational risk by focusing on its measurement and modelling. Using both theoretical and practical material, he lays out a foundation theory that can be applied and refined for application in the financial sector and beyond. Operational Risk: Measurement and Modelling is a comprehensive source for understanding the effects of risk inherent in all operations. This book: - Provides a set of assumptions, definitions, and methodology for quantifying operational risk - Uses comprehensive step-by-step descriptions based on real-world examples to demonstrate the application and reinforce key ideas.. - Introduces Delta-EVTTMTM, a new technique that allows firms to deal with losses resulting from routine errors, control breakdowns, and rare events. - Relies on causality as the key for identifying operational risk that can be controlled and provides a basis for management action. - Explains clearly the relation between the risk assessment, process engineering, and statistical loss models. - Includes and explains in detail the formulas and procedures for calculating many common risk measures and building causal models using Bayesian networks.