Banks told to seize moment to devise new op risk charge
Banks should “get clever and develop their own model” in response to SMA, says UK bank risk manager
Rather than battling supervisors’ plans for a standardised measurement approach (SMA) to operational risk capital, banks should club together to come up with an alternative method that preserves some of the better aspects of op risk modelling, a forthcoming report will argue.
The Basel Committee on Banking Supervision outlined the details of its proposed SMA charge in March. If it is taken forward, as expected, it would replace all existing approaches to op risk capital. That includes the
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