Complaints are reaching me about the way in which the US regulators have released the notice of proposed rulemaking (NPR). My sources point out that the advance notice of proposed rulemaking – released way back in those halcyon days of August 2003 – came with the draft supervisory guidance on internal ratings-based systems for corporate credits and supervisory expectations for operational risk management.
Unfortunately no such supervisory guidance was forthcoming with the release of the long-delayed NPR. Without the accompanying guidance, many do not know quite how to interpret large chunks of the NPR. Words like "mish mosh" and "goobly-gook" have found their way into my email box. Even I, who has been known to digest the occasional European Commission document for breakfast, will admit that the notice of proposed rulemaking isn’t the best example of ‘plain English’ the US government has ever produced.
‘Enlighten us’, scream the hoards of risk management executives, compliance professionals, consultants, and yes, even the software vendors. ‘What does it all mean?’
Certainly there will be changes to the new supervisory guidance for operational risk. My sources tell me that the supervisory standards have been reduced in number, with a couple of them co-mingled – possibly the ones that specified the four advanced measurement approach building blocks. Possibly a new one has been added that gives more detail about the level of granularity that is expected in units of measurement.
It would be nice to have some more certainties from the US regulators, although I suppose I would also commend them for the flexibility that they have shown in recent weeks, what with deciding to consult on the standardised approach for credit risk in the NPR and meeting with all those irate banks over what I hear was a rather warm summer. I think many would welcome a move by the US regulators to implement Basel II more along the lines that are seen in other jurisdictions. Certainly, other jurisdictions would welcome with open arms the return of the US regulators to the international fold on a number of issues.
Speaking of regulators around the world, I’d like to mention that presentations from the recent e-symposium by BaselAlert.com can be found archived online. The all-day event had supervisors from Australia, Hong Kong, the Netherlands, Canada, the UK, and the US – among others – speaking on how Basel II implementation is going in their jurisdictions. Some – including the FSA and the US regulators – didn’t mince words. The presentations can be found at www.baselalert.e-symposium.com.
Have a good month!
Oct - Dec
NEW YORK 23 & 24 OCT 2006
LONDON 30 & 31 OCT 2006
Investigating Enterprise Risk Management
Oprisk and Compliance magazine is delighted to invite you to this timely ‘new’ training course. It offers you practical advice for implementing and embedding an enterprise risk management strategy. Top risk practitioners will demonstrate how they are dealing with current challenges and innovations in their organisations. Book early to take advantage of the ‘early bird’ offer. For more information contact Adriana Lobo via [email protected] or go to
1 & 2 NOVEMBER 2006
Europe’s premier annual conference on compliance and financial crime – examining the latest developments and evolving methodologies. Highly topical sessions on Mifid, AML, Fraud, TCF solutions and op risk and compliance. Compliance 06 Europe is renowned for its line-up of distinguished speakers and the high quality panels, enabling delegates to gain maximum benefit from open discussions. Register your place today –
6 DECEMBER 2006
Strategic thinking and tactical solutions for AML – AML USA is an intensive one-day programme which aims to help executives shape their AML strategy and implements smart tactical solutions to the challenges that are faced today. With our focus on best-practice sessions and case studies, we are highly confident in delivering a truly enriching experience. Book your place today to avoid missing out! For more details email:
More on Operational Risk
Operational risk managers highlight repeat failures at firms
Heavy regulatory costs and fragile systems will be problems in 2015
Poor IT risk management threatened UK financial system
Slow-moving investigations mean misdeeds will linger on
Sign up for Risk.net email alerts
Sponsored webinar: IBM
Watch highlights of this year's London conference
Operational risk and the challenges of defining and dealing with conduct risk
Watch discussions and speakers from our North America conference
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.