“Operational risk is the risk that is not inherent in financial, systematic or market-wide risk. It is blogthe risk remaining after determining financing and systematic risk, and includes risks resulting from breakdowns in internal procedures, people and systems”  defines investopedia.

Here is a classic case study how the famous brokerage firm Knight capital failed. More than 3 years ago, Knight Capital suffered a loss of nearly half a billion dollars and needed to sell itself after a defective software resulted in nearly $7 billion of wrong trades. The US SEC issued an order against Knight Capital that described exactly what happened this is interesting: Continue reading

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