Op risk rules inadequate, says Isma professor

LONDON - The Basel II capital accord rules regarding operational risks for financial institutions are inadequate, Jacques Pézier, a visiting professor at Reading University’s Isma Centre, told delegates at a conference in London this morning.

Pézier said he would encourage banks “not to look at operational risk losses in isolation" and not "to rely on the Basel proposals for definition of operational risk losses" when it comes to calculating capital charges. Basel II, which all internationally active banks should adopt by 2007, currently has three stages for operational risk capital charges: a basic indicator approach, a standardised approach and an advanced measurements approach. But all three approaches fail to encourage