Operational risk and its impact on North American and British banks

This study examines the financial impact of operational risk and its loss announcements on the value of publicly traded banks in United States, UK and Canada. There are three main findings: (1) on average, the market reacts more negatively to a loss's initial announcement than its settlement news; (2) operational loss events cause strong reputational damage to the announcing banks and (3) the market is particularly sensitive to the announcement of losses caused by internal fraud, of a large magnitude, resulted in the order of restitution, and that are the rulings of a regulatory investigation.