Publication date: 3 Juin 2016
The European Banking Federation (EBF) welcomes the opportunity to comment on this second consultative document in which the Basel Committee for Banking Supervision (BCBS) puts forward policy proposals to replace the current approaches for operational risk (Basic Indicator-BIA, Standardised-SA and Advanced Measurement-AMA) with a single non-model-based method, the Standardised Measurement Approach (SMA).
The SMA relies on the simplicity and comparability provided by a standardised approach, proposing the risk sensitivity through the banks’ internal loss experience, which was a contributory component of the AMA. Therefore, this new proposal of 4 March 2016, maintains the introduction of a Business Indicator (BI) as a new proxy for operational risk exposure (with some modifications regarding the definition from the October 2014 proposal) and incorporates the Loss Component which depicts past risk experience, considered to add some risk sensitivity.
In this document, the EBF presents its observations on the Basel Committee’s review of the operational risk (OR) measurement framework