The CEB defines operational risk as the potential loss resulting from inadequate or failed internal processes, people and systems or from external events, and includes legal risk.
Moreover, the CEB takes into account reputational risks linked to its activities. By deliberately choosing to follow the Basel Committee recommendations and best practices, the Bank is committed to constantly assessing its operational risk and to implementing the appropriate mitigating measures.
In 2017, the Operational Risk Department has fully implemented the permanent internal control framework with the purpose of ensuring that it is always adequate in terms of design and effectiveness. Each Directorate reports on an annual basis on the efficiency of its respective permanent control environment.
In line with Basel II’s recommendations on banking regulations, CEB has adopted the Basic Indicator Approach in order to calculate the operational risk charge against the Bank’s prudential equity.