Search Results

This chapter employs data supplied by six large, internationally active banks to identify if the regularities in the loss data will make consistent modeling of operational losses possible. It is noted that operational risk is a material risk faced by financial institutions. The data indicate that it may be difficult to fit parametric loss-severity distributions over the entire range of loss amounts, even if separate analyses are conducted for each business line and event type. Loss-severity distributions at the six banks under consideration have tail indexes ranging between 0.50 and 0.86. Assuming a Pareto severity distribution yielded capital estimates that were broadly consistent with the Basel Committee's expectation that operational risk accounts for 12 percent of minimum regulatory capital. As banks obtain three or more years of good operational loss data, the ability to differentiate across alternative distributional assumptions should improve.

Overall and insured losses of natural disasters are steadily increasing and reach record highs. The worldwide insurance and reinsurance industry plays an important role to provide immediate financial support to overcome the impact of natural disasters. This chapter provides information about the development of insurance solutions for natural disasters - from a historical perspective up to current insurance schemes, including micro-insurance. It also analyses in detail the impact of natural disasters of the last decades and points out the most affected areas, the costliest and deadliest events, the distribution by peril and the impact in different income groups.

This chapter explores how responsibility for protecting electronic data is currently attributed and examines legislation aimed at managing the problem of compromised personal records. It compares the aims of legislation with an analysis of reported incidents of data loss for the period of 1980–2007. A discrepancy between legislative responses to electronic data loss and the actual damages incurred reveals that responsibility for maintaining the security of electronic personal records has been misplaced and should be reexamined. The chapter concludes with a brief discussion of the options for public policy oversight.