In a training seminar focused on understanding and managing operational risks, a supervisor from Firm W discusses various potential risks that could impact the firm's operations, both in the short-term and the long-term. Can you provide an example of a loss that Firm W might suffer as a result of an operational risk?

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After a surprise announcement by the central bank that interest rates would increase, bond prices fall and Firm W incurs a significant loss on its bond portfolio.

5.9%

The data capture system of Firm W fails to capture the correct market rates causing derivative trades to be transacted at incorrect prices, resulting in significant losses.

76.5%

As a result of an increase in commodity prices, the share price of a company that Firm W invested in falls significantly, causing major investment losses.

11.8%

A counterparty of Firm W fails to settle its debt to Firm W, and in doing this, it is in breach of a legal agreement to pay for services rendered.

5.9%

Financial Risk Manager Part 2

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