Title: The correspondence analysis between the key indicators and events of operational risk: a case study of the insurance sector in Tunisia

Authors: Wael Hemrit; Mounira Ben Arab; Nizar Raissi

Addresses: IHEC, Route Sidi Mansour Km 10, B.P. no. 967-3018 Sfax, Tunisia ' ISG, Tunis 41, Rue de la Liberté, Cité Bouchoucha 2000, Le Bardo, Tunisia ' Université de Kairouan, Avenue Baiet El Hekma, El Mansoura, 3131 Kairouan, Tunisia

Abstract: The purpose of this study is to examine the main origins of the emergence of operational risk events that exist in the Tunisian insurance companies. Indeed, the determination of the key risk indicators associated with each event allows us to reduce the losses and to have a pro-active and comprehensive operational risk management system. The associations between each of these key indicators and risk events were illustrated in a map based on correspondence factor analysis. This allows us to categorise the events that are matched to the same indicators. Findings show that operational risk events 'clients, products, and business practice and execution, delivery, and process management' can be considered a first class event risk and they result from omission and employees' actions and inactions. We also find that 'internal fraud and external fraud' are in the same category, unless they are associated with failure of corporate governance system and changes in market conditions. The event 'business disruption and systems failures' is considered an independent category and is linked with lack of internal control and management actions and inactions.

Keywords: key risk indicators; KRIs; operational risk; factorial correspondence analysis; FCA; insurance industry; Tunisia; risk events.

DOI: 10.1504/IJRAM.2013.057103

International Journal of Risk Assessment and Management, 2013 Vol.17 No.2, pp.107 - 147

Received: 22 Mar 2012
Accepted: 03 Jun 2013
Published online: 19 Jul 2014 *

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