The Assessment of Operational Risk in the Austrian Large Value Payment System Artis

Abstract

The objective of this paper is to quantify the impact of an operational incident on the smooth functioning of ARTIS and on the operational reliability of the system by use of simulations. The analysis focuses on operational problems occurring in the realm of one of the participants. In this project we do not simulate an operational failure of the ARTIS platform itself. The scenarios are designed according to an ex-ante estimation of potential risk concentrations based on actual data for the sample period (Schmitz et al. 2006).

The main finding of the simulations was - given the existing business continuity arrangements would prove effective - the high operational reliability of ARTIS.

However, without the use of business continuity arrangements or in the case that they would not prove fully effective, the contagion effect on the smooth functioning of the payment system was substantial in all three scenarios. A non-negligible number of banks failed to settle payments.

Keywords: operational risk, payment systems, simulations,

JEL Classification: E10, G10