Nineteen percent of banks around the world have no formal operational risk programmes in place, according to a survey by specialist information provider Risk Waters Group and business intelligence company SAS.
However, this is an improvement on last year, when 24% of financial organisations fell into this category.
The global survey, "Operational Risk Management in the Financial Services Industry", polled more than 250 financial institutions and regulators.
Forty-nine percent of respondents were in Europe, 22% in North America, 15% in Asia Pacific, with the balance in the rest of the world. African respondents accounted for 3% of the total.
SAS says 19% of medium and large financial institutions have not yet identified the best organisational framework for addressing operational risk. This is despite the advancing regulatory compliance schedule associated with the New Basel Capital Accord (Basel II).
"These companies cite difficulties in collating clean data and poor awareness among staff as major obstacles despite average reported losses of $18.8 million per year," it adds.
"To meet the basic principles of Basel II, banks need to collect and analyse data for both credit and operational risk," says Peyman Mestchian, head of SAS UK's risk management practice.
"The research sought to identify key drivers and demonstrates how the market has moved, with many now seeing both operational and credit risk management as an opportunity rather than red tape."
Basel II determines how much capital banks must set aside to cover unforeseen hazards. This it does by prescribing how to identify, measure, monitor and manage the full range of risks to which the banks are exposed. The greater the risk, the greater the amount of capital needed to cover it.
"It appears that the lack of a clear regulatory framework may be holding some organisations back," the survey says. "This is a mistake. It will be some years before best practices are established, and in the meantime financial institutions can reap considerable benefits by pursuing their own programmes."
Survey respondents identify IT and systems failure as the biggest source of operational risk. This finding is in line with a recent report by Accenture, Mercer Oliver Wyman and SAP that half of South African banks surveyed were spending up to 80% of their Basel II budgets on systems and interfaces.
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