Journal of Operational Risk

Risk.net

Operational risk: impact assessment of the revised standardized approach on Indian banks

Pankaj Sinha and Sakshi Sharma

  • With the proposed new "revised standardised approach"(SA) of operational risk capital charge calculation it might be of interest to see the change in capital estimations of Indian banks as per the revised framework.
  • If adopted, this framework will not pose a huge challenge in terms of capital requirements for smaller banks. 
  • Its advantage reflects in its ability to capture the drivers of operational risk in a better manner, and strikes equilibrium between the simplicity and accuracy. 

ABSTRACT

The Basel guidelines on operational risk reinforce the relevance of so-called residual risk and outline procedural changes to demonstrate and reinforce policy effectiveness. Banks have been encouraged to move along the spectrum of available approaches (ie, the basic indicator approach, standardized approach and advanced methods approach) for capital calculation as they develop more sophisticated operational risk measurement frameworks and practices.With the proposed newrevised standardized approach for operational risk capital charge calculation, it might be of interest to see the change in capital estimations of Indian banks as per the revised framework. If adopted, this framework will not pose a huge challenge in terms of capital requirements for smaller banks. Larger banks may show an increase in capital charges as per the revised framework; however, the estimated impact on Tier 1 capital will be minimal.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here