Basel II delay gives chance for other advanced op risk approaches

The year-long delay to the coming into effect of the Basel II banking accord means global banking regulators can study a broad range of advanced approaches to calculating an operational risk capital charge.

As initially proposed by regulators in January, Basel II contained only one advanced approach to calculating the charge – the internal measurement approach.

But now regulators say they are examining a number of advanced options for measuring the risk of loss to banks from such operational hazards as fraud, technology failure and trade settlement errors.

These include the loss distribution approach that in January they mooted as only a possibility at some stage after Basel II came into effect.

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