IMPROVING FINANCIAL MECHANISMS FOR ASSESSING AND MITIGATING OPERATIONAL RISKS IN COMMERCIAL BANKS IN UZBEKISTAN

This study examines the financial mechanisms employed by commercial banks in Uzbekistan to assess and mitigate operational risks, drawing on the Basel Committee's operational risk framework and institutional economics theory. Using official data from the Central Bank of Uzbekistan (CBU), the IMF–World Bank Financial Sector Assessment Program (FSAP), and government-reported statistics on cybercrime and financial fraud, the study develops an Operational Risk Assessment and Resilience Index (ORARI). The index incorporates three indicators—return on assets (ROA), return on equity (ROE), and the number of banks assessed under the CBU's Guidelines on Risk-Based Supervision (GRBS)—weighted using the coefficientof-variation method. The analysis covers three reference years: 2015, 2023, and 2024. The index increased from 0.126 in 2015 (classified as "Very Low," before the introduction of risk-based supervision) to 0.400 in 2023 (classified as "Medium," when the GRBS pilot covered four banks) and reached 0.993 in 2024 (classified as "Very High," following the expansion of GRBS coverage to 14 banks). These developments coincide with improvements in banking-sector profitability, with ROA increasing from 1.71% to approximately 1.9–2.0% and ROE from 13.35% to approximately 17.1–17.9%, alongside the expansion of formal risk-based supervisory assessments. The findings highlight the importance of integrating financial performance indicators with supervisory coverage measures to monitor the development of operational risk assessment and institutional resilience in Uzbekistan's banking sector.