Viable system model for operational risk management in banking institutions

Based on the guidelines that regulatory bodies require from banking institutions in order to manage their operational risks, they establish standards and frameworks that define their risk management structures to allow banking institutions to control, mitigate and avoid the materialization of risk. Unfortunately, the frameworks put banking institutions at risk of disappearing if they do not propose flexible solutions in the management of capital reserve for operational risk. The flexibility of the organizational structure is necessary for viability in the current situation, so the proposal is the use of the Viable System Model (VSM) that allows managing and supervising the operational risk of banking institutions as an adaptable and comprehensive framework based in a scientific model with a systemic approach. The methodology is carried out in the Mexican banking context, demonstrating that by applying the VSM as a framework to manage operational risk, the viability and flexibility of the criteria for the correct management of future threats is achieved. The model provides a comprehensive operational risk management framework with a systemic approach.