Practice Your Knowledge

All ambiguous events should be classified as 'Internal Fraud'

When an operational loss event has characteristics of multiple Basel event categories, banks should apply the primary classification rule: classify the event under the category that best represents the primary driver or cause of the loss — not just the immediate trigger. Documented rationale must be maintained. Example: a system failure that enables an external fraud is classified as External Fraud (the fraud is the primary driver and loss source) with a secondary note on the enabling system failure

The Basel Committee provides specific rules for every possible ambiguous scenario

All events involving technology must be classified as 'System Failures'