Financial institutions have made significant progress in the management of these risks and Pakistani banks have considerably improved their processes for identification and management of credit and market risk exposures. By contrast, it is relatively difficult to measure the level of operational risk exposures on an enterprise wide level. The global financial crisis has also demonstrated the cost of operational risk failures.
It has been observed that in several instances, the mitigation or transfer of credit and market risks actually gives rise to operational risk. Accordingly, operational risk is gaining prominence and coming close to credit risk as the foremost safety and soundness challenge to the financial institutions.