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them was Credit risk. To lower the effect of the credit risk the 5Cs of finance were used, which is an old but effective tool. The conditions for every borrower is different from each other, there 5Cs are analyzed then terms and conditions are set. (Factors Affecting the Agricultural Loan Decision-Making Process by Wilson & Christine, 2006).

The Basel II Accord defines the operational risk as “the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes Legal risk but excludes Strategic and Reputational Risk.”

The failure of Societe General's is clearly the result of lack of consideration on operations risk. If we want to manage, supervise and control the operations risk the best option we can have is to refer to the guidelines defined by Basel Committee on Banking Supervision. (Managing bank Operations Risk by Stanley Epstein)

Operational risk is a type of risk which arises due to not complying and following the rules set by the organization. To counter this risk the organization must report all the illegal activities, both internal and external controls should be ensured. (Managing Risk in Financial Sector by Adeel Mirza.)

Operational risk is partly related with technology. It can arise when existing technology malfunctions or breaks down. In 2001, a failure of system was noticed when CITI Bank ATM system crashed for a long period. Its 2000 nationwide ATMs and all online banking functions were down for almost two business days. In Sep 2004, a third of Wachovia securities broker, sales assistant and other employees were blocked and could not access their systems for one week. Consequently the operations like viewing client's accounts, place trades etc were suspended because they did not have backup system. In Feb 2005, Bank of America announced that all computer backup tapes have been lost during transportation to data storage house which contains all personal information of about 1.2million Federal Government Employees Charge Card. Operational risk management department ruled out the chances of access to the data because the backup data was stored with them and there were strict security checks on it that only concerned personnel could access. (A. Saunders & Marcia M. Cornett, 2006)

According to an article in Harvard Business Review journal, organizations either cooperation or banks can map their fraud risks and can prioritize different operational risk types. So a heat map can focus unlikely but potentially devastating risk events also called black swan events. (Toby J.F Bishop & Frank E. Hydoski, 2009).

For every organization it's important to utilize its recourses to optimum level. For countering other risk the companies design technique to tackle with operation risk. In this regard training is given and they have started employing operational risk professionals. (Deep Raj, 2004)

Operational risk is very important for financial institutions in this era. Financial institutions use different approaches to lower the effect of the operational risk. 1) Basic indicator approach 2) standardized approach 3) Advance measurement approach. (Alexander G本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。