Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We use a unique cross-country data set at the loss event level to document the evolution and characteristics of banks’ operational risk. Operational value-at-risk varies substantially—from 6 percent to 12 percent of total gross income—depending on the method used, and shows a growing cyber risk component. It takes, on average, more than a year for operational losses to be discovered and recognized in the books. We show that operational losses depend on macroeconomic conditions and the regulatory environment. Periods of excessively accommodative monetary policy are followed by larger operational losses. Stronger supervision is associated with lower operational losses.