Original Research
A review of operational risk in banks and its role in the financial crisis
Submitted: 13 September 2012 | Published: 29 November 2013
About the author(s)
Erika de Jongh, North West University, South AfricaRiaan 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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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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