Original Research

A review of operational risk in banks and its role in the financial crisis

Erika de Jongh, Riaan de Jongh, Dawie de Jongh, Gary van Vuuren
South African Journal of Economic and Management Sciences | Vol 16, No 4 | a440 | DOI: https://doi.org/10.4102/sajems.v16i4.440 | © 2013 Erika de Jongh, Riaan de Jongh, Dawie de Jongh, Gary van Vuuren | This work is licensed under CC Attribution 4.0
Submitted: 13 September 2012 | Published: 29 November 2013

About the author(s)

Erika de Jongh, North West University, South Africa
Riaan de Jongh, North West University, South Africa
Dawie de Jongh, North West University, South Africa
Gary van Vuuren, Fitch Ratings, United Kingdom

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Abstract

The role of operational risk in the 2007/2008 financial crisis is explored. The factors that gave rise to the crisis are examined and it is found that although the event is largely regarded as a credit crisis, operational risk factors played a significant role in fuelling its duration and severity. It is concluded that, from an operational risk perspective, 2008 was the worst on record. Considering the extensive role of operational risk in global financial calamities, suggestions are made to improve the management of this risk type.

 


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