Operational Risk is defined 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.
The Operational Risk Division coordinates day-to-day operational risk management based on a predefined methodology. Risk mitigation measures and action plans are implemented and centrally monitored through a dedicated IT tool.
The Permanent Internal Control Framework ensures that internal controls in each business line are always adequate in terms of design and effectiveness.
All business processes are modelled in cooperation with the business lines so as to maintain a detailed procedure and control map.
The Operational Risk Management Policy codifies the methodology to identify, measure, control and report operational risks. It lays down sound practices to ensure effective and consistent management across the CEB. Additionally, the Business Continuity Plan (BCP) hedges against disruption of the Bank’s business activities.
In line with Basel Committee’s recommendations, the CEB has adopted the Basic Indicator Approach in order to calculate the operational risk capital charge against the Bank’s prudential equity.