The risk of losses, business process disruptions and negative reputational impact resulting from inadequate or failed internal processes, human error and systems, or from external events. The definition of operational risk includes information security risk.
Operational risks are inherent in Swedbank’s business activities and are present in any financial institution. It is not cost efficient to attempt to eliminate all operational risks, nor is it possible to do so. Swedbank seeks to maintain the lowest possible level of operational risks, taking into account market sentiment and regulations, as well as Swedbank’s strategy, rating ambition and capacity to absorb operational risk losses.
Larger losses of material significance are rare and Swedbank aims to reduce the likelihood of such losses through operational risk management and control, continuity management to maintain readiness for events that could cause financial losses or reputational damage, or could impact the availability of our services.
Swedbank has internal regulations on operational risk management and works in a structured fashion with e.g. risk analysis and risk-reducing measures in connection with significant changes and with continuity planning and preparedness measures to minimize the effects of incidents as quickly as possible if they do occur.
Normally, the purpose of outsourcing is to achieve higher efficiency and quality within our business by enabling the concerned business unit to focus on its core activities. Outsourcing is seen as a high-risk activity and can result in reduced control of the outsourced operations, information, supervision and confidentiality or a loss of know-how, to name a few. Therefore, the group has to identify the risks associated with outsourcing when an outsourcing project is initiated and take suitable, adequate and necessary measures to decrease risks. Furthermore, it is important to acknowledge that outsourcing does not discharge the group from the liability towards customers and authorities.
Outsourcing of a business is associated with various risks. Hence, the local supervisory authorities have established rules governing how financial activities may be outsourced. Swedbank has internal frameworks that regulate the conditions for outsourcing of activities. The frameworks have been adopted to provide practical guidance when an outsourcing project is initiated.