Challenges to operational-risk quantification under Basel II In the context of Basel II, it has often been argued that measuring operational risk is much more difficult than measuring market or credit risk; however, any model intended to capture unexpected loss has its challenges.
For example, market-risk models can be violated when the price of financial products moves in a way that is outside of the historical norm. Credit-risk models need to consider downturn estimates for loss given default, which can depend on the severity of the economic downturn and the price of collateral.