Within a banking context, the Basel Committee on Banking Supervision has defined a set of risk event categories for operational risk known as the Basel Risk event categories.
These categories provide a framework for classifying and analyzing the wide variety of different types of operational risk events.
The Basel risk event categories are as follows, internal fraud.
This category includes risks arising from acts of fraud committed by individuals within the organization.
It covers activities such as embezzlement, insider trading, money laundering, and employee misconduct.
External fraud. External fraud encompasses risks associated with fraudulent acts committed by people external to the organization.
This can include theft, forgery, hacking, identity theft, and other criminal activities, employee practices, and workplace safety.
This category covers risks related to employment practices, including issues such as discrimination, harassment, workplace accidents, and health and safety concerns, clients, products and business practices.
Risks in this category are associated with the products and services offered by the organization and the practices employed in conducting business.
It includes risks such as MIS-selling of products or services, inadequate disclosure, non-compliance with regulations and product defects, damage to physical assets.
This category includes risks arising from physical damage to the organization's assets such as buildings, equipment, and infrastructure.
It covers events such as natural disasters, fires, anilism, and accidents, business disruption and systems failures.
Risks in this category are related to disruptions in business operations and failures of internal systems and processes.
It includes events such as IT system outages, power failures, supply chain disruptions and failures in business continuity planning, execution, delivery, and process management.
This category encompasses risks associated with failures in the execution, delivery, and management of processes and systems.
It includes errors, delays, And inefficiencies in operational processes, inadequate monitoring and control mechanisms, workplace safety and environmental instance.
Risks in this category are related to accidents, injuries, and environmental instance occurring within the organization's premises.
It includes events such as workplace accidents, occupational health hazards, and environmental pollution.
