List the types of operational loss events identified in the Basel Framework.

The Basel Framework identifies seven types of operational loss events. Banks must track and report losses under each category:

Internal Fraud

Losses due to acts intended to defraud, misappropriate property, or circumvent regulations by at least one internal party. Examples include intentional misreporting of positions, employee theft, and insider trading on an employee’s own account.

External Fraud

Losses due to acts intended to defraud or misappropriate property by a third party. Examples include robbery, forgery, cheque kiting, and damage from computer hacking.

Employment Practices and Workplace Safety

Losses arising from acts inconsistent with employment, health, or safety laws. Examples include workers’ compensation claims, violation of employee health and safety rules, organised labour activities, and discrimination claims.

Clients, Products and Business Practices

Losses from unintentional or negligent failure to meet professional obligations to specific clients or from the nature or design of a product. Examples include fiduciary breaches, misuse of confidential customer information, money laundering, and the sale of unauthorised products.

Damage to Physical Assets

Losses from damage to physical assets from natural disasters or other events. Examples include terrorism, vandalism, earthquakes, fires, and floods.

Business Disruption and System Failure

Losses from disruption of business or system failures. Examples include hardware and software failures, telecommunication problems, and utility outages.

Execution, Delivery and Process Management

Losses from failed transaction processing or process management. Examples include data entry errors, collateral management failures, incomplete legal documentation, and unauthorised access given to client accounts.