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What are the sources of operational risk? How can a bank prepare for the expected (normal)...

What are the sources of operational risk?

How can a bank prepare for the expected (normal) and unexpected operation risk?

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Answer #1

Sources of operational risk according to basel II norms are-.

A. Natural disaster

B. Terrorism

C. Vandalism

D. Business disruption

E. System failures

F. Data entry errors

G. Accounting errors

A Bank can protect itself from different kind of operational errors which are controllable in nature and within its control, are kind of system failures and data entry errors and errors which are related to internal business.

An efficient business must be knowing its operational efficiency and various kind of operational risk associated with it which are controllable in nature and it should be proactively managing those kind of risk in order to prevent and mitigate the loss from them.

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