Does digital transformation matter for operational risk exposure?

Article

Uddin, M. H., Mollah, S., Islam, N. and Ali, M. H. 2023. Does digital transformation matter for operational risk exposure? Technological Forecasting and Social Change. 197 (Art. 122919). https://doi.org/10.1016/j.techfore.2023.122919
AuthorsUddin, M. H., Mollah, S., Islam, N. and Ali, M. H.
Abstract

Basel Committee recommends banks maintain a capital buffer for operational risk exposure based on business volumes, assuming aggressive actions for quicker business growth could increase risk exposures. We argue that technological innovations expose banks to more operational risk because technology helps increase business volume, but system failure, problems with internal processes, and disruptions from external and internal security threats are inherent to technology. Based on 10 years of data for 264 banks from 43 countries, we find that digitalized banking operation is an underlying driver of operational risk that comes with increased business volume. Banks proactively take more operational risks by increasing cyber spending to tackle FinTech competition in the digitalized economy. Digitalization could generally matter for operational risk exposure, but the natural experiment does not find cybersecurity threats per se could increase operational risks even though cybersecurity appears to be a serious threat to digital banking. The study creates new avenues for future research.

KeywordsOperational risk; Digitalization; Cyber technology; Cybersecurity; Bank
JournalTechnological Forecasting and Social Change
Journal citation197 (Art. 122919)
ISSN0040-1625
Year2023
PublisherElsevier
Publisher's version
License
File Access Level
Anyone
Digital Object Identifier (DOI)https://doi.org/10.1016/j.techfore.2023.122919
Publication dates
Online12 Oct 2023
PrintDec 2023
Publication process dates
Accepted03 Oct 2023
Deposited17 Nov 2023
FunderTaylor's Univerisity
Copyright holder© 2023, The Authors
Permalink -

https://repository.uel.ac.uk/item/8wy7y

Log in to edit

Download files

Publisher's version
1-s2.0-S0040162523006042-main.pdf
License: CC BY 4.0
File access level: Anyone

  • 238
    total views
  • 128
    total downloads
  • 7
    views this month
  • 7
    downloads this month

Export as

Related outputs

Digital Transformation in Large Established Organizations: Four Restructuring Dilemmas based on Dynamic Capabilities
Kulichyova, A., Islam, N., Kazantsev, N. and White, L. 2025. Digital Transformation in Large Established Organizations: Four Restructuring Dilemmas based on Dynamic Capabilities. International Journal of Management Reviews. p. In press.
Aligning Risk and Value Creation: A Process Model of Supply Chain Risk Management in Geopolitical Disruptions
Zheng, L., Islam, N., Zhang, J., Behl, A., Wang, X. and Papadopoulos, T. 2025. Aligning Risk and Value Creation: A Process Model of Supply Chain Risk Management in Geopolitical Disruptions. International Journal of Operations and Production Management. p. In press. https://doi.org/10.1108/IJOPM-03-2024-0271
Paving the way to environmental sustainability: A systematic review to integrate big data analytics into high-stake decision forecasting
Agrawal, R., Islam, N., Samadhiya, A., Shukla, V., Kumar, A. and Upadhyay, A. 2025. Paving the way to environmental sustainability: A systematic review to integrate big data analytics into high-stake decision forecasting. Technological Forecasting and Social Change. 214 (Art. 124060). https://doi.org/10.1016/j.techfore.2025.124060
Antecedents and consequences of social robots adoption for SMEs - Reimaging emerging technologies in the context of the new normal
Islam, N., Rakshit, S. and Paul, T. 2025. Antecedents and consequences of social robots adoption for SMEs - Reimaging emerging technologies in the context of the new normal. Technological Forecasting and Social Change. 210 (Art. 123887). https://doi.org/10.1016/j.techfore.2024.123887
Empowering Firms with AI-Generated Content: Strategic Approaches to R&D and Advertising in the Era of Generative AI
Li, L., Li, J., Islam, N., Zhang, J. and Behl, A. 2025. Empowering Firms with AI-Generated Content: Strategic Approaches to R&D and Advertising in the Era of Generative AI. IEEE Transactions on Engineering Management. p. In press.
Product Attribute and Heterogeneous Sentiment Analysis-Based Evaluation to Support Online Personalized Consumption Decisions
Yang, Z., Li, Q., Islam, N., Han, C. and Gupta, S. 2024. Product Attribute and Heterogeneous Sentiment Analysis-Based Evaluation to Support Online Personalized Consumption Decisions. IEEE Transactions on Engineering Management. 71, pp. 11198-11211. https://doi.org/10.1109/TEM.2024.3413999
Does Fintech Adoption Improve Sustainable Supply Chain Management? An Innovation-Intensive Environment Perspective
Jia, F., Guo, J., Chen, L. and Islam, N. 2024. Does Fintech Adoption Improve Sustainable Supply Chain Management? An Innovation-Intensive Environment Perspective. IEEE Transactions on Engineering Management. 72, pp. 210-226. https://doi.org/10.1109/TEM.2024.3515471
Resilience and agility in sustainable supply chains: A relational and dynamic capabilities view
Ul Akram, M., Islam, N., Chauhan, C. and Zafar Yaqub, M. 2024. Resilience and agility in sustainable supply chains: A relational and dynamic capabilities view. Journal of Business Research. 183 (Art. 114855). https://doi.org/10.1016/j.jbusres.2024.114855
Unpacking the effects of R&D strategy proximity on inter-firm knowledge flow: evidence from the global 3D printing industry
Xu, G., Kang, N., Hu, W., Islam, N. and Zhou, Y. 2024. Unpacking the effects of R&D strategy proximity on inter-firm knowledge flow: evidence from the global 3D printing industry. Technology Analysis & Strategic Management. In Press. https://doi.org/10.1080/09537325.2024.2358429
Barriers and Enablers for Industry 4.0 in SMEs: A Combined Integration Framework
Müller, J. M., Islam, N., Kazantsev, N., Romanello, R., Olivera, G., Das, D. and Hamzeh, R. 2024. Barriers and Enablers for Industry 4.0 in SMEs: A Combined Integration Framework. IEEE Transactions on Engineering Management. In Press. https://doi.org/10.1109/TEM.2024.3365771
Circular Economy, Open Innovation, and Green Innovation: Empirical Evidence From Prefecture-Level Cities in China
Ai, H., Islam, N., Mangla, S. K., Song, M. and Tan, X. 2024. Circular Economy, Open Innovation, and Green Innovation: Empirical Evidence From Prefecture-Level Cities in China. IEEE Transactions on Engineering Management. 71, pp. 5706-5719. https://doi.org/10.1109/TEM.2024.3357350
How Does Supply Chain Transparency Influence Idiosyncratic Risk in Newly Public Firms: The Moderating Role of Firm Digitalization
Zheng, L. J., Islam, N., Zhang, J. Z., Wang, H. and Au, K. M. A. 2024. How Does Supply Chain Transparency Influence Idiosyncratic Risk in Newly Public Firms: The Moderating Role of Firm Digitalization. International Journal of Operations and Production Management. 44 (9), pp. 1649-1675. https://doi.org/10.1108/IJOPM-08-2023-0689
Demystifying the Impact of Service Recovery Strategies: Evidence From Healthcare and Telecom Sectors
Shankar, A., Talwar, S., Islam, N., Alshibani, S. M. and Sharm, P. 2024. Demystifying the Impact of Service Recovery Strategies: Evidence From Healthcare and Telecom Sectors. IEEE Transactions on Engineering Management. 71, pp. 6649-6661. https://doi.org/10.1109/TEM.2023.3285152
What keeps me engaging? A study of consumers' continuous social media brand engagement practices
Osei-Frimpong, K., Otoo, B. A. A., McLean, G., Islam, N. and Soga, L. R. 2023. What keeps me engaging? A study of consumers' continuous social media brand engagement practices. Information Technology and People. 36 (6), pp. 2440-2468. https://doi.org/10.1108/ITP-11-2021-0850
Emotions and food waste behavior: Do habit and facilitating conditions matter?
Jabeen, F., Dhir, A., Islam, N., Talwar, S. and Papa, A. 2023. Emotions and food waste behavior: Do habit and facilitating conditions matter? Journal of Business Research. 155 (Art. 113356). https://doi.org/10.1016/j.jbusres.2022.113356
Is BlockChain Mining Profitable in the Long Run?
Islam, N., Marinakis, Y., Olson, S., White, R. and Walsh, S. 2023. Is BlockChain Mining Profitable in the Long Run? IEEE Transactions on Engineering Management. 70 (2), pp. 386-399. https://doi.org/10.1109/TEM.2020.3045774
Mobile Health Interventions for Cancer Care and Support: The Next Level of Digitalization in Healthcare
Tandon, A., Dhir, A. and Islam, N. 2023. Mobile Health Interventions for Cancer Care and Support: The Next Level of Digitalization in Healthcare. IEEE Transactions on Engineering Management. 71, pp. 6173-6189. https://doi.org/10.1109/TEM.2023.3243724
Different strokes for different folks: Comparative analysis of 3D printing in large, medium and small firms
Dhir, A., Talwar, S., Islam, N., Alghafes, R. and Badghish, S. 2023. Different strokes for different folks: Comparative analysis of 3D printing in large, medium and small firms. Technovation. 125 (Art. 102792). https://doi.org/10.1016/j.technovation.2023.102792
Investigating visibility affordance, knowledge transfer and employee agility performance. A study of enterprise social media
Pitafi, A. H., Rasheed, M. I., Islam, N. and Dhir, A. 2023. Investigating visibility affordance, knowledge transfer and employee agility performance. A study of enterprise social media. Technovation. 128 (Art.), p. 102874. https://doi.org/10.1016/j.technovation.2023.102874
Emergency medical supplies scheduling during public health emergencies: algorithm design based on AI techniques
Xia, H., Sun, Z., Wang, Y., Zhang, Z., Kamal, M. M., Jasimuddin, S. M. and Islam, N. 2023. Emergency medical supplies scheduling during public health emergencies: algorithm design based on AI techniques. International Journal of Production Research. 63 (2), pp. 628-650. https://doi.org/10.1080/00207543.2023.2267680
Enablers or Inhibitors? Unpacking the Emotional Power Behind In-Vehicle AI Anthropomorphic Interaction: A Dual Factor Approach by Text Mining
Bai, S., Yu, D., Han, C., Yang, M., Islam, N., Yang, Z., Tang, R. and Jiayuan, Z. 2023. Enablers or Inhibitors? Unpacking the Emotional Power Behind In-Vehicle AI Anthropomorphic Interaction: A Dual Factor Approach by Text Mining. IEEE Transactions on Engineering Management. 71, pp. 13149-13165. https://doi.org/10.1109/TEM.2023.3327500
Applying artificial intelligence in healthcare: lessons from the COVID-19 pandemic
Balasubramanian, S., Shukla, V., Islam, N. and Duong, L. 2023. Applying artificial intelligence in healthcare: lessons from the COVID-19 pandemic. International Journal of Production Research. 63 (2), pp. 594-627. https://doi.org/10.1080/00207543.2023.2263102
Resistance of multiple stakeholders to e-health innovations: Integration of fundamental insights and guiding research paths
Talwar, S., Dhir, A., Islam, N., Kaur, P. and Almusharraf, A. 2023. Resistance of multiple stakeholders to e-health innovations: Integration of fundamental insights and guiding research paths. Journal of Business Research. 166 (Art. 114135). https://doi.org/10.1016/j.jbusres.2023.114135
Data sharing for business model innovation in platform ecosystems: From private data to public good
Kazantsev, N., Islam, N., Zwiegelaar, J., Brown, A. and Maull, R. 2023. Data sharing for business model innovation in platform ecosystems: From private data to public good. Technological Forecasting and Social Change. 192 (Art. 122515). https://doi.org/10.1016/j.techfore.2023.122515
Worker and workplace Artificial Intelligence (AI) coexistence: Emerging themes and research agenda
Zirar, A., Ali, S. I. and Islam, N. 2023. Worker and workplace Artificial Intelligence (AI) coexistence: Emerging themes and research agenda. Technovation. 124 (Art. 102747). https://doi.org/10.1016/j.technovation.2023.102747
Drivers of Sustainable Business Model Innovations: An Upper Echelon Theory Perspective
Dhir, A., Khan, S. J., Islam, N., Ractham, P. and Meenakshi, N. 2023. Drivers of Sustainable Business Model Innovations: An Upper Echelon Theory Perspective. Technological Forecasting and Social Change. 191 (Art. 122409). https://doi.org/10.1016/j.techfore.2023.122409
Theorizing the relationship between the digital economy and firm productivity: The idiosyncrasies of firm-specific contexts
Sun, Z., Zhao, L., Kaur, P., Islam, N. and Dhir, A. 2023. Theorizing the relationship between the digital economy and firm productivity: The idiosyncrasies of firm-specific contexts. Technological Forecasting and Social Change. 189 (Art. 122329). https://doi.org/10.1016/j.techfore.2023.122329
Personality and travel intentions during and after the COVID-19 pandemic: An artificial neural network (ANN) approach
Talwar, S., Srivastava, S., Sakashita, M., Islam, N. and Dhir, A. 2022. Personality and travel intentions during and after the COVID-19 pandemic: An artificial neural network (ANN) approach. Journal of Business Research. 142, pp. 400-411. https://doi.org/10.1016/j.jbusres.2021.12.002
Gamification and e-learning for young learners: A systematic literature review, bibliometric analysis, and future research agenda
Behl, A., Jayawardena, N., Pereira, V., Islam, N., Del Giudece, M. and Choudrie, J. 2022. Gamification and e-learning for young learners: A systematic literature review, bibliometric analysis, and future research agenda. Technological Forecasting and Social Change. 176 (Art. 121445). https://doi.org/10.1016/j.techfore.2021.121445
The dark side of phubbing in the workplace: Investigating the role of intrinsic motivation and the use of enterprise social media (ESM) in a cross-cultural setting
Yousaf, S., Rasheed, M. I., Kaur, P., Islam, N. and Dhir, A. 2022. The dark side of phubbing in the workplace: Investigating the role of intrinsic motivation and the use of enterprise social media (ESM) in a cross-cultural setting. Journal of Business Research. 143, pp. 81-93. https://doi.org/10.1016/j.jbusres.2022.01.043
Way off the mark? Open innovation failures: Decoding what really matters to chart the future course of action
Chaudhary, S., Kaur, P., Talwar, S., Islam, N. and Dhir, A. 2022. Way off the mark? Open innovation failures: Decoding what really matters to chart the future course of action. Journal of Business Research. 142, pp. 1010-1025. https://doi.org/10.1016/j.jbusres.2021.12.062
Developing a mental health index using a machine learning approach: Assessing the impact of mobility and lockdown during the COVID-19 pandemic
Nanath, K., Balasubramanian, S., Shukla, V., Islam, N. and Kaitheri, S. 2022. Developing a mental health index using a machine learning approach: Assessing the impact of mobility and lockdown during the COVID-19 pandemic. Technological Forecasting and Social Change. 178 (Art. 121560). https://doi.org/10.1016/j.techfore.2022.121560
The effect of the valence of forgiveness to service recovery strategies and service outcomes in food delivery apps
Kaur, P., Talwar, S., Islam, N., Salo, J. and Dhir, A. 2022. The effect of the valence of forgiveness to service recovery strategies and service outcomes in food delivery apps. Journal of Business Research. 147, pp. 142-157. https://doi.org/10.1016/j.jbusres.2022.04.020
Influence of blockchain technology in SME internationalization: Evidence from high-tech SMEs in India
Rakshit, S., Islam, N., Mondal, S. and Paul, T. 2022. Influence of blockchain technology in SME internationalization: Evidence from high-tech SMEs in India. Technovation. 115 (Art. 102518). https://doi.org/10.1016/j.technovation.2022.102518
What drives me there? The interplay of socio-psychological gratification and consumer values in social media brand engagement
Osei-Frimpong, K., McLean, G., Islam, N. and Otoo, B. A. 2022. What drives me there? The interplay of socio-psychological gratification and consumer values in social media brand engagement. Journal of Business Research. 146, pp. 288-307. https://doi.org/10.1016/j.jbusres.2022.03.057
Why Do Retail Customers Adopt Artificial Intelligence (AI) Based Autonomous Decision-Making Systems?
Sharma, S., Islam, N., Singh, G. and Dhir, A. 2022. Why Do Retail Customers Adopt Artificial Intelligence (AI) Based Autonomous Decision-Making Systems? IEEE Transactions on Engineering Management. 71, pp. 1846-1861. https://doi.org/10.1109/TEM.2022.3157976
RFID-integrated blockchain-driven circular supply chain management: A system architecture for B2B tea industry
Paul, T., Islam, N., Mondal, S. and Rakshit, S. 2022. RFID-integrated blockchain-driven circular supply chain management: A system architecture for B2B tea industry. Industrial Marketing Management. 101, pp. 238-257. https://doi.org/10.1016/j.indmarman.2021.12.003
Relational Power Is the New Currency of Hybrid Work
Soga, L., Bolade-Ogunfodun, Y., Islam, N. and Amankwah-Amoah, J. 2022. Relational Power Is the New Currency of Hybrid Work. MIT Sloan Management Review.
An integrated social network marketing metric for business-to-business SMEs
Rakshit, S., Islam, N., Mondal, S. and Paul, T. 2022. An integrated social network marketing metric for business-to-business SMEs. Journal of Business Research. 150, pp. 73-88. https://doi.org/10.1016/j.jbusres.2022.06.006
Family enterprise and technological innovation
Islam, N., Wang, Q., Marinakis, Y. and Walsh, S. 2022. Family enterprise and technological innovation. Journal of Business Research. 147, pp. 208-221. https://doi.org/10.1016/j.jbusres.2022.04.004
Exploring the knowledge base of innovation research: Towards an emerging innovation model
Ávila-Robinson, A., Islam, N. and Sengoku, S. 2022. Exploring the knowledge base of innovation research: Towards an emerging innovation model. Technological Forecasting and Social Change. 182 (Art. 121804). https://doi.org/10.1016/j.techfore.2022.121804
Why Do SMEs Adopt Artificial Intelligence-Based Chatbots?
Sharma, S., Singh, G., Islam, N. and Dhir, A. 2022. Why Do SMEs Adopt Artificial Intelligence-Based Chatbots? IEEE Transactions on Engineering Management. 71, pp. 1773-1786. https://doi.org/10.1109/TEM.2022.3203469
Corporate entrepreneurship champions: mapping the past and present states of the field for future advancements
Ghura, A. S., Sharma, G. D., Pereira, V., Islam, N. and Chopra, R. 2022. Corporate entrepreneurship champions: mapping the past and present states of the field for future advancements. International Journal of Entrepreneurial Behavior & Research. 28 (8), pp. 2151-2181. https://doi.org/10.1108/IJEBR-09-2021-0758
Balancing food waste and sustainability goals in online food delivery: Towards a comprehensive conceptual framework
Shankar, A., Dhir, A., Talwar, S., Islam, N. and Sharma, P. 2022. Balancing food waste and sustainability goals in online food delivery: Towards a comprehensive conceptual framework. Technovation. 17 (Art. 102606). https://doi.org/10.1016/j.technovation.2022.102606
The Impact of Technological Turbulence on SMEs Business Model Innovation Performance: The Contingent Role of Entry Order
Molina-Castillo, F-J., Stanko, M. A., Islam, N. and de Reuver, M. 2022. The Impact of Technological Turbulence on SMEs Business Model Innovation Performance: The Contingent Role of Entry Order. IEEE Transactions on Engineering Management. 71, pp. 4116-4130. https://doi.org/10.1109/TEM.2022.3210488
A readiness assessment framework for Blockchain adoption: A healthcare case study
Balasubramanian, S., Shukla, V., Singh Sethi, J., Islam, N. and Saloum, R. 2021. A readiness assessment framework for Blockchain adoption: A healthcare case study. Technological Forecasting and Social Change. 165 (Art. 120536). https://doi.org/10.1016/j.techfore.2020.120536
Measuring topic network centrality for identifying technology and technological development in online communities
Yang, Z., Zhang, W., Yuan, F. and Islam, N. 2021. Measuring topic network centrality for identifying technology and technological development in online communities. Technological Forecasting and Social Change. 167 (Art. 120673). https://doi.org/10.1016/j.techfore.2021.120673
Social media and the new product development during COVID-19: An integrated model for SMEs
Rakshit, S., Mondal, S., Islam, N., Jasimuddin, S. and Zhang, Z. 2021. Social media and the new product development during COVID-19: An integrated model for SMEs. Technological Forecasting and Social Change. 170 (Art. 120869). https://doi.org//10.1016/j.techfore.2021.120869
Smart mirror fashion technology for the retail chain transformation
Ogunjimi, A., Rahman, M., Islam, N. and Hasan, R. 2021. Smart mirror fashion technology for the retail chain transformation. Technological Forecasting and Social Change. 173 (Art. 121118). https://doi.org/10.1016/j.techfore.2021.121118
The Evolution of Interindustry Technology Linkage Topics and Its Analysis Framework in Three-Dimensional Printing Technology
Yang, Z., Islam, N., Shi, Y., Venkatachalam, K. and Huang, L. 2021. The Evolution of Interindustry Technology Linkage Topics and Its Analysis Framework in Three-Dimensional Printing Technology. IEEE Transactions on Engineering Management. 70 (10), pp. 3601-3621. https://doi.org/10.1109/TEM.2021.3086760
Business-to-business open innovation: COVID-19 lessons for small and medium-sized enterprises from emerging markets
Markovic, S., Koporcic, N., Arslanagic-Kalajdzic, M., Kadic-Maglajlic, S., Bagherzadeh, M. and Islam, N. 2021. Business-to-business open innovation: COVID-19 lessons for small and medium-sized enterprises from emerging markets. Technological Forecasting and Social Change. 170 (Art. 120883). https://doi.org/10.1016/j.techfore.2021.120883
Psychological and behavioral outcomes of social media-induced fear of missing out at the workplace
Tandon, A., Dhir, A., Islam, N., Talwar, S. and Mäntymäki, M. 2021. Psychological and behavioral outcomes of social media-induced fear of missing out at the workplace. Journal of Business Research. 136, pp. 186-197. https://doi.org/10.1016/j.jbusres.2021.07.036
Social media users’ online subjective well-being and fatigue: A network heterogeneity perspective
Kaur, P., Islam, N., Tandon, A. and Dhir, A. 2021. Social media users’ online subjective well-being and fatigue: A network heterogeneity perspective. Technological Forecasting and Social Change. 172 (Art. 121039). https://doi.org/10.1016/j.techfore.2021.121039
Construction Industry 4.0 and Sustainability: An Enabling Framework
Balasubramanian, S., Shukla, V., Islam, N. and Manghat, S. 2021. Construction Industry 4.0 and Sustainability: An Enabling Framework. IEEE Transactions on Engineering Management. 71, pp. 1-19. https://doi.org/10.1109/TEM.2021.3110427
Mobile apps for SME business sustainability during COVID-19 and onwards
Rakshit, S., Islam, N., Mondal, S. and Paul, T. 2021. Mobile apps for SME business sustainability during COVID-19 and onwards. Journal of Business Research. 135, pp. 28-29. https://doi.org/10.1016/j.jbusres.2021.06.005
Procurement 4.0: How Industrial Customers Transform Procurement Processes to Capitalize on Digital Servitization
Sjödin D., Kamalaldin, A., Parida, V. and Islam, N. 2021. Procurement 4.0: How Industrial Customers Transform Procurement Processes to Capitalize on Digital Servitization. IEEE Transactions on Engineering Management. 70 (12), pp. 4175-4190. https://doi.org/10.1109/TEM.2021.3110424
The impact of blockchain technology on the tea supply chain and its sustainable performance
Paul, T., Mondal, S., Islam, N. and Rakshit, S. 2021. The impact of blockchain technology on the tea supply chain and its sustainable performance. Technological Forecasting and Social Change. https://doi.org/10.1016/j.techfore.2021.121163
Why Do People Use Artificial Intelligence (AI)-Enabled Voice Assistants?
Malodia, S., Islam, N., Kaur, P. and Dhir, A. 2021. Why Do People Use Artificial Intelligence (AI)-Enabled Voice Assistants? IEEE Transactions on Engineering Management. 71, pp. 491-505. https://doi.org/10.1109/TEM.2021.3117884