Europe allows wider role for op risk insurance in Cad 3

European banks and investment firms would be able to use operational risk insurance to reduce capital charges in all approaches to measuring op risk under new European Union (EU) capital adequacy rules.

That is what is likely to be proposed by the European Commission in a paper on progress with the European Union’s third capital adequacy directive, or Cad 3, that’s expected to be issued in mid-November, banking industry and regulatory sources said.

It would be good news for European investment firms and asset managers and their supervisors, who feared the firms would be required to set aside penal amounts of protective capital to guard against operational hazards such as fraud, technology

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