Credit risk boundary event definition

  • What is a boundary event in risk?

    An operational risk boundary event is an operational risk event which triggers a consequence (e.g. financial loss) in another risk category..

Credit Boundary Events: Losses that are related to both operational risk and credit risk. For example, where a loan defaults (credit risk) and the bank discovers that the collateral for the loan was not properly secured (operational risk).

What are insurance boundary events?

Insurance boundary events are being defined as insurance events, which are partly or completely caused by operational risk failures or insurance event with an increased financial impact caused by an operational risk failure.
An identified risk or concern that requires senior management attention, such as:

  • monitoring and/or mitigation.
    • ,

    What is an operational risk boundary event?

    An operational risk boundary event is an operational risk event which triggers a consequence (e.g. financial loss) in another risk category. “An Insurance Risk /Operational Risk boundary event is an operational risk event that triggers an insurance risk consequence (e.g. a financial loss).” .

    ,

    When should a boundary event be flagged?

    Any boundary event should be flagged, even if the operational risk contribution of the boundary loss is 100% of the total loss amount.
    Only the operational risk related amount of the loss should be reported.
    If this part cannot be identified due to the nature of the event, the event should not be reported to the loss database.

    ,

    When should a boundary event be reported?

    Reporting requirement:

  • The reporting of boundary events is only required when the operational risk contribution to that loss event can be calculated.
    Only the operational risk related amount of the loss should be reported.
    If this part cannot be identified due to the nature of the event, the event should not be reported to the loss database.

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