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Basel II contains a wider and broad definition of operational risk. Reputational risk events can arise as a result of many different causes, often involving an operational risk event. Operational risk is the risk of possible adverse effects on the bank’s financial result and capital caused by omissions (unintentional and intentional) in employees’ work, inadequate internal procedures and processes, inadequate management of information and other systems, as well as by unforeseeable external events. activities as formalizing definitions of operational risk events and improving incident identification and reporting. Under Basel II, large banks were permitted to model their own operational risk capital using the advanced measurement approach (AMA). Banks that take a comprehensive approach to ORM recognize four broad areas that need attention. The definition of operational risk adopted under Basel II is “Operational risk is defined as the risk of loss resulting from inadequate or failed processes, people and systems or from external events.” The four core operational risk requirements are identify, assess, control, and mitigate operational risk. Operational risk can occur at every level in an organisation. A new approach for calculating operational risk capital. Operational risk is "the risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses". December 18, 2020 General General Managing operational risk: Four areas to watch. Operational Risk means the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, and includes legal risk.. Basel, the FSB) are considering conduct issues and the potential interaction with the prudential framework 5 . 3 • Operational risk in the Basel framework • Definition: Operational riskis defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Of course, we will be very careful to link our work to Basel II to make sure that in the end, we are still compliant with the Accords. 1 In contrast, the UK supervisory authorities define operational resilience as: ‘the ability of firms and FMIs and the financial sector as a whole to prevent, adapt, respond to, recover and learn from operational disruptions’. In particular: • Banks are expected to base their ORC calculations on ten years of data. Finally, it allows for this capital charge to vary significantly in the light of the regulator’s view of the quality of the operational risk management of a bank. 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