The process of managing operational risk as an 'innovative' bank risk type: a case study from Bosnia and Herzegovina
Despite the fact that operational risks are as old as banks, operational risk management has become one of the new challenges for bank management since they face the new capital accord (i.e., Basel II). Basel II 'opened the door' to operational risks and proposed specific rules for operational risk management, including approaches for evaluation of these risks as well as calculation the level of the required capital. Hence, this can be viewed as an 'innovative' bank risk type and, in the paper, we discuss specificities of managing of operational risks with a focus on the banking sector of Bosnia and Herzegovina. Operational risks depend on the level of market development (emerging or developed). Since they are higher in emerging markets (such as Bosnia and Herzegovina), investment in decision support systems should aim to reduce operational risks exposure.