Akin to the fundamental review of the market risk-based capital rules, Basel has now launched a comparable ground-up study of its current operational risk-based capital rules. These replace the current basic and standardized approaches in favor of a new model that would significantly hike operational risk-based capital for most banks, reversing many aspects of the global rules that, while they are not now included in the U.S. standards, would force a dramatic revision of them and, as a result, also result in significant increases in the U.S. capital charges against risks such as system failure, cyber-attack, fraud, and legal or reputational risk. The simplified approaches would be replaced with one largely dependent on bank size, essentially a new leverage standard for operational risk that is a buffer regardless of actual risk or costly mitigants against it.
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