Deutsche Bank and a revisit to Operational Risk

Definition of Operational Risk[1]

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. It includes legal risk but excludes business and reputational risk.

This blog analyses whether the operational  risk  category is breached.

Color code from red alert to green zone.

OR Category	Breach-  Evidence -
Origination & Execution Risk	The Q3 loss: €6 billion. Deutsche will close some branches and pull out of 10 countries – Argentina, Chile, Mexico, Peru, Uruguay, Denmark, Finland, Norway, Malta and New Zealand. It will review India and Asia operations.
Fraud Risk	Fraud quantum: €1.2bn  set apart for probable claims.
Business Continuity Risk	Incurred losses  incurring losses resulting from the interruption of normal business activities, i.e. interruptions to our infrastructure as well as to the infrastructure that supports our businesses (including third party vendors) and the communities in which we are located.
Regulatory Compliance Risk	Has been in wrong  books of regulators in UAE, USA, UK and Germany. Has been imposed huge fines / punitive action.
Information Technology Risk	Has reportedly 45 systems which it says now needs to be pruned. One wonders why so labyrinthine systems so long. Was it to be a step ahead of regulators?. How will it look into the future if it cannot analyse big data? Were the Vendors cheating or they were rendering to prescription?
Information Security Risk	Unknown quantum
Vendor Risk	Has occurred as IT risk is accepted. 6,000 external contractor jobs to be axed.
Fiduciary Service Risk	Has seemingly occurred at several touch points.
Financial Reporting and Recording Risk	Must wait for compliance reports
Real Estate Risk or Facilities and Infrastructure risk  .	Seems protected
Staff Risk  .	Even the joint CEOs got only a 60 % thumbs up at the last AGM. Down the line many may have blundered, many may have overlooked. At least do not seem to understand. 9,000 full-time equivalent positions - 4,000 of them in Germany -  to be deprived.
Tax Compliance Risk	Unknown quantum
Transaction Processing Risk	Regulators in USA,UK, Germany, Dubai seem to have pointed out deficiencies in transaction processing or in our internal processes or controls result in losses.
Legal Risk	DB may be the subject of a claim or proceedings alleging non-compliance with contractual or other legal or statutory responsibilities

This is an academic case study with no risk or responsibility. The blog's author makes no recommendations for investment or divestment. 

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[1] https://annualreport.deutsche-bank.com/2014/ar/management-report/risk-report/operational-risk.html