A long history of incidents, ranging from rogue trading to IT breakdowns to mis‑selling of products and services, testifies to the dangers that lie beyond the intentional financial risk-taking inherent to the financial services business model.
Financial services are not alone in being exposed to large, catastrophic operational risks. Other capital‑intensive industries, such as energy, aviation, and natural resources, have their own histories of calamity, including nuclear accidents, plane crashes, and oil spills.
Despite the shared exposure to such losses, operational risk management in financial services has developed along a path that differs markedly from the path taken by other industries. There are some good reasons for this: financial firms have distinctive characteristics. Still, financial firms can learn a lot by looking at how other capital-intensive industries manage their operational risk.
