Joseph Guagliardo is an attorney and Executive Director of Corporate Development at FNX Limited, Philadelphia
Joseph Guagliardo is an attorney and Executive Director of Corporate Development at FNX Limited, Philadelphia

The New Basel Accord: Shaping Operational Risk Regulation

Pressure is mounting within the financial community to give greater scrutiny to operational risk. Joe Guagliardo assesses how the use of technology solutions can be used to comply as well as shape operational risk regulation.

First Published: e-Forex Magazine 11 / Features / July, 2003

In the wake of recent corporate failures and the increasing number of high-profile bank failures linked to operational events, pressure is mounting within the financial community to give greater scrutiny to operational risk. While operational risk has always been considered among other risks such as credit, market and systemic risks, until recently it has not been explicitly addressed in any regulatory framework.As regulators, self-regulatory organizations and industry trade groups execute plans to reduce other sources of risk, financial institutions are feeling additional strains on operations in efforts to comply with policies and anticipated regulations. One such example of this is the opening of CLS Bank in September 2002. The specialty bank, established to provide continuous linked settlements of FX trades, is expected to significantly reduce credit and liquidity risk in the FX market but in turn will likely increase operational demands on member institutions (Galati, G. (2002)). Further, as trading...continued

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