QUESTION

Globalization and deregulation in financial markets, combined with increased sophistication in financial technology, have introduced more complexities into the activities of banks and therefore their risk profiles. These reasons underscore bank's and supervisor's growing focus upon the identification and measurement of operational risk.

a) Define Operational risk.

b) Give two examples of operational risk associated with e-banking and explain how each could be manifested.

c) How can e-banking increase the level of operational risk for a financial institution?

d) How can a financial institution control operational risks?