In this paper operational risk is considered from a purely business or profitability point of view. We show for quantifiable operational risk that the three basic figures for profitability management - value, costs and risks - can be modelled such that an integrative point of view on profitability over the value chain is possible. To achieve this goal, we specify the general dynamic and stochastic model and consider an IT-network case study. The case study shows how neglecting the operational risk dependence structure or the counter-measures leads to distorted and misleading risk and cost figures, respectively.
This document is published in Advances in Operational Risk, 2nd Edition, Risk Books