COSAR: A Collaborative Sense-and-Respond Theory for Bank Operational Risk Management

Description

With the increasingly global business environment and fast-paced financial innovation, banks are facing much more challenges in Operational Risk Management (ORM) than ever before. As the banking system is becoming complex and interconnected, it is more and more difficult to identify and assess the severity of operational risk and/or its sources. In this project, we propose a Collaborative Sense-and- Respond Theory for bank operational risk management (or COSAR for simplicity) by extending the Sense-and-Respond model for building adaptive enterprises. Specifically, we advocate active operation surveillance and risk reduction based on intelligent sensing capabilities enabled by Internet-of-Things technologies for bank operational risk management. This kind of active ORM expects to extend and improve currently used Basel II methods and other risk mitigation or aggregations methods. We plan to explore the relevant theories and technologies and build a theoretical framework, which will be used to guide the design and development of intelligent ORM systems for banks.