A risk-control model for operational risk capital

Basel II's op risk proposals should allow for a simple internal model, argues Tony Blunden in his second article on the new capital adequacy accord.

A simple internal model for calculating operational risk capital charges for banks could easily be available in time for the new global capital adequacy accord due to come into force in 2004. The databases required already exist.

Basel II, the new capital accord put forward by the Basel Committee of banking supervisors from the Group of 10 leading economies, proposes only a single, relatively complex internal model for operational risk - and at the moment there is no data available to support

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