Over the past decade, large financial institutions have experienced more than 100 operational loss events in excess of $ million each; some of these individual operational losses, resulting from fraud, rogue trading, and settlements stemming from questionable business practices, have exceeded $ billion. An effective operational-risk management framework, therefore, is essential for identifying and managing operational risks.
As you know, analysts at the main rating agencies are placing increasing importance on operational risk when they assess a bank's credit ratings. We believe effective operational-risk management has both quantitative and qualitative components and that reliance on solely quantitative or solely qualitative approaches is no longer appropriate.