On 4 March 2016 the Basel Committee on Banking Standards (BCBS) released the long awaited revised consultation paper on operational risk capital. This proposed to scrap internal modelling (under the Advanced Measurement Approach, AMA) and revise all current approaches to, instead, measuring operational risk capital with one Standardized Measurement Approach (SMA). The BCBS has subsequently also published a consultation paper on revised Pillar 3 disclosure requirements, including amendments relating to operational risk. These include revising disclosures to meet the newly proposed SMA, additional disclosures of internal losses, and detailed information relating to the operational risk management framework.
Two weeks following the release of the consultation, KPMG in the UK held a roundtable discussion with senior operational risk representatives from across the industry to debate these new proposals. The roundtable was conducted under the Chatham House Rule. There were thirteen participants across a mix of G-SIBs, larger banks, and smaller UK-focused firms, with firms currently adopting The Standardized Approach (TSA) and the AMA. The discussions were wide ranging with lots of insights and views shared on the proposals themselves and more broadly regarding the future of operational risk management.
Full survey details can be found here.