FSA op risk standing group releases use test paper

UK regulator publishes paper on the use test

LONDON – The Financial Services Authority (FSA) has published a paper Operational risk: the ‘use’ test.

The FSA notes in the paper, dated June 30, that after discussions with a variety of firms over the use test – which involves the use of the risk assessment and risk measurement systems established under the Capital Requirements Directive – it found some are having difficulty in demonstrating they have integrated their operational risk framework into their day-to-day risk management process and system.

The paper contains a number of questions firms might address to determine how well they have integrated the risk framework into their risk management processes. This relies on the regulatory requirements and guidance published by the Committee of European Banking Supervisors and a possible use test structure (and the components of that structure) for evaluation.

Click here for a copy of the paper:
http://www.fsa.gov.uk/pubs/international/orsg_8sep08.pdf

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