Deposit insurance is a put option that encourages excessive risk taking by banks. Excess litigation against a bank, a form of operational risk, is one indicator of risk because litigation often reflects a failure to maintain a strong system of internal control. We analyze five different measures...

Operational risk is fundamentally different from all other risks taken on by a bank. It is embedded in every activity and product of an institution, and in contrast to the conventional financial risks (e.g. market, credit) is harder to measure and model, and not straight forwardly eliminated...

It is generally considered that the GFC was triggered, at least in part, by failures in markets trading in complex securities based upon so-called 'subprime' mortgages. While subprime mortgages carry greater credit risk than 'prime' mortgages, the processes used to securitize these mortgages...

Korean business groups, chaebol, reduced operational risk in the aftermath of the 1997 Asian financial crisis by reducing (increasing) investment in risky (safe) member firms. Risk reduction was accompanied by capital reallocation from risky member firms to safe member firms through equity...

The latest financial crisis has exposed substantial weaknesses in the bank risk models used by national regulators as well as the Basel Accords. The study is aimed at presenting the evolution and critique of risk measures and risk models in banking, with a special focus on the dynamically...