Advanced frameworks for managing operational risk in banking digital transformation projects
Posted: Apr 08, 2022
Abstract
The digital transformation of banking institutions represents a paradigm shift in financial services delivery, yet introduces complex operational risks that traditional risk management frameworks are ill-equipped to address. This research introduces a novel Quantum-Inspired Risk Assessment Framework (QIRAF) that integrates principles from quantum computing, behavioral economics, and complex adaptive systems theory to model the non-linear, interdependent nature of operational risks in digital banking ecosystems. Unlike conventional approaches that treat risks as discrete, independent events, QIRAF conceptualizes risk as a quantum superposition of potential states, enabling probabilistic assessment of emergent risks arising from technological interdependencies, human-system interactions, and regulatory compliance challenges. Our methodology employs quantum probability amplitudes to represent risk likelihoods and impacts, allowing for the modeling of entangled risk factors that traditional probability theory cannot adequately capture. The framework was validated through application to three major digital transformation initiatives across international banking institutions, demonstrating superior predictive accuracy for operational risk events compared to traditional Value at Risk (VaR) and scenario analysis approaches.
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