Cebs seeks comment on op risk guidelines

Cebs has released updated guidelines for operational risk, the 'Use Test' and AMA capital calculation

LONDON - The Committee of European Banking Supervisors (Cebs) has issued a 'Compendium of supplementary guidelines on implementation issues of operational risk' for public consultation. The Compendium outlines Cebs' current expectations and is designed to promote greater homogeneity and regulatory understanding in building operational risk frameworks. Cebs says the paper (CP21) reflects a need for clarification and further guidance since the release of its 'Guidelines on the validation and assessment of the advanced measurement and internal ratings-based approaches' (GL10) in April 2006.

"When we published GL10, there was not a lot of experience on issues that could arise from the implementation of operational risk frameworks, both from the industry as well as the supervisory side," says Arnoud Vossen, secretary-general of the Cebs Secretariat. "Given the infancy of operational risk as a separate risk management discipline, some topics were still under development when we published GL10. The Compendium aims to fill the gap by tackling relevant topics that require further clarification and supervisory guidance."

Unlike previous Cebs offerings, it takes the form of a collection of individual guidance papers covering particular op risk implementation issues. Much of the document relates to clarifications of the 'use test' for the advanced measurement approach (AMA) to operational risk and the calculation of AMA capital. A significant part is also dedicated to defining and clarifying the scope of operational risk - in response to calls for clarification of the Capital Requirements Directive. The Compendium is available for public consultation until March 31. Comments can be made over the Cebs website or at a public hearing on March 10.

The compendium may be downloaded here.