OpRisk North America: Union Bank explains capital allocation model

Technique helps banks pass 'use test'

A blueprint model and a crane

Splitting up overall capital among business units by risk and loss profiles is a useful technique to drive better operational risk management – as long as it's done right, Union Bank's head of operational risk management Patrick McDermott told delegates at the OpRisk North America conference in New York today. The regulatory 'use test' requires banks to demonstrate that their risk measurements are affecting the way they do business. Using capital allocation "can help pass the use test,