Abstract

The integration of operational risk into the Basel II Accord was a long process because of the hostile reaction from the banking sector. At the end of the 1990s, the risk of operational losses was perceived as relatively minor. However, some events had shown that it was not the case. The most famous example was the bankruptcy of the Barings Bank in 1995. The loss of $ 1.3 bn was due to a huge position of the trader Nick Leeson in futures contracts without authorization. Other examples included the money laundering in Banco Ambrosiano Vatican Bank (1983), the rogue trading in Sumitomo Bank (1996), the headquarter fire of Crédit Lyonnais (1996), etc. Since the publication of the CP2 in January 2001, the position of banks has significantly changed and operational risk is today perceived as a major risk for the banking industry. Management of operational risk has been strengthened, with the creation of dedicated risk management units, the appointment of compliance officers and the launch of anti-money laundering programs.