Preliminary communication

https://doi.org/10.17559/TV-20200907112351

Operational Risk Management Using Multi-Criteria Assessment (AHP Model)

Vladimir Ristanović* orcid.org/0000-0002-2957-3465 ; Institute of European Studies, Trg Nikole Pašića 11, Belgrade, Serbia
Dinko Primorac ; Department of Economy, University North Croatia, 104. brigade 1, Varaždin, Croatia
Goran Kozina ; Department of Economy, University North Croatia, 104. brigade 1, Varaždin, Croatia

Abstract

Decision making and management are synonyms. Banks are facing a number of business risks and operational risk is prevalent. Risk management is related to making decisions; therefore, it is important for the whole organization. The aim of this paper is to develop a decision-making system when choosing the method of operational risk management by using the Analytical Hierarchical Process (AHP). AHP is an efficient process in solving decision-making problems. The final decision depends on the evaluation of a set of alternatives and decision criteria. Therefore, AHP defines the criteria related to operational risk and the alternatives that the bank management can undertake in order to successfully manage operational risk. The main purpose of the process is to find appropriate solutions for defined user factors in the current competitive environment. The results, obtained by the classical numerical method show that External Factors is the dominant criterion, especially during the financial crisis or the Covid pandemic, and that solutions should be sought in international standards along with using the control tools created by banks themselves.

Keywords

AHP model; decision-making; management; multi-criteria assessmenet; operational risk

Hrčak ID:

255886

URI

https://hrcak.srce.hr/255886

Publication date:

17.4.2021.

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