Op risk is much more than a capital allocation exercise, says Moody's

Sam Theodore, Moody's managing director for European bank ratings and author of the new report, said: "We also believe that the use of quantitative criteria for operational risk management - building a loss database for the bank, benchmarking it against external industry data or trying to predict expected operational losses through statistical models - certainly has its place, but only as first step."

What remains critically important is the implementation of an effective qualitative process of identifying, measuring, managing and controlling operational risk throughout the organisation, said Moody's in its report.