The basic components of a risk management system include identifying and defining the risks the firm is exposed to, assessing their magnitude, mitigating them using a variety of procedures, and setting aside capital for potential losses. Economic modelling is used well in achieving these. The development of empirical models of financial precariousness leads to increased modelling of market risk which is the risk arising from fluctuations of financial asset pricing. Concerning credit risk, models have recently been developed for large scale credit risk management purposes. Categorizing and modelling of risk has some complications and sometimes they do not cover all aspects of the business, for instance, in modelling risk associated with transactions, we will usually not put into consideration electrical failure, employee fraud, natural disasters and risks of such nature. Operational risk modelling creates arrays for such unforeseen events. The current status of operational risk management by financial institutions nurtures a lot of arguments and uncertainties, explorations on the subject tenders the complexities associated with it. More concrete solutions to risk management have been formulated through the contribution of the (BCBS) Basel Committee on Banking Supervision. A new Basel Capital Accord, known normally as the Basel II Accord was proposed in 2001 by the Bank of International Settlement defining some key requirements of a well-defined model for operational risk management from an operational excellence perspective and part of an integrated performance platform. going beyond Basel II and using ORM as a transformational dais.

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