Operational Risk Management in Financial Institutions

| May 20, 2015

 
Please just answer the question below from the attachment:

Please read the attached disclosures from Deutsche Bank’s 2014 Annual Report and US 2014 20-F Report
and be prepared to answer:

1. Which operational risks does Deutsche Bank regard as the most important to its business (Annual Report
page 202, 20-F pages 24 – 32)?
 Do you think that these operational risks are consistent with Deutsche Bank’s business model as a
major international commercial bank with substantial investment banking and trading activities?
 Are there any others which you feel are relevant which are omitted here?

2. Why do you think Deutsche Bank employs such a variety of operational risk management techniques?
(Annual Report pages 204 – 206)

3. How large are Deutsche Bank’s operational risk losses in 2014 compared to Deutsche Bank’s income and
capital in 2014? To what does Deutsche Bank attribute the decrease from 2013? Note – Deutsche Bank’s
pre-tax income for 2014 was EUR3.116 billion and Core Tier 1 capital was EUR45.5 billion (Annual Report
page 209).

4. Which types of operational risk incidents are (a) most frequent and (b) most costly for Deutsche Bank over
the 5 year period from 2009 – 2014? What could be driving this pattern? (Annual Report page 209).
Content
 Background and assignment
 Extracts from Deutsche Bank’s 2014 Annual Report:
o Operational risk disclosures, pages 202 – 211
 Extracts from Deutsche Banks’s 2014 US 20-F Report:
o Pages 24 – 32
Background
Operational Risk is defined by the Bank for International Settlements as the “‘the risk of loss resulting from
inadequate or failed internal processes, people and systems or from external events”. The purpose of this preread
is to familiarise participants with: (a) the types of operational risks faced by banks and their relative
importance and (b) the governance structures and methodologies utilised by banks to manage their
operational risks.

 

 

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