2019 Financial
and Social Report

Operational risk

The capital requirements for operational risk are calculated using the standardized approach (CRR Article 317-320). They represented about 8% of the total amount of capital requirements as at 31 December 2019. (Art. 446)

Losses stemming from operational risk events

The below table presents operational risk events registered in the operational risk database in 2019. Losses on treasury transactions concluded in 2008 and operational risk events related to credit risk, which are treated as credit risk events for the purpose of calculating credit risk capital requirements, are not included in the table.

Table 39. Operational risk events (the amount of losses), divided by events categories and kind of loss (in PLN million)

Event category Net loss Gross loss
Internal fraud 1,3 1,4
External fraud 0,1 0,3
Business disruption and system failures 0,2 0,3
Damage to physical assets 0 0,3
Execution,delivery and process management 0,1 0,1
Clients, products and business practices 0,1 0,1
TOTAL 1,8 2,4

Operational risk management system requires identification of a causes of an events and implementation of decisions or actions to reduce frequency and financial impact of events. It is completed using change of processes, strengthening of internal controls, adjustments of documentation and procedures and dedicated trainings.

In 2019 Bank Millennium Group reported no material operational risk events. i.e. those for which gross loss exceeds 10% of capital requirements for operational risk.

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