Basel II op risk survey planned for June 1

The survey – known as the second tranche of the third Basel II quantitative impact study (QIS3) – will seek further data on losses from such hazards as fraud, technology failure and trade settlement errors, principally to aid regulators in their task of refining the advanced approaches to measuring operational risk under the controversial Accord.

The op risk survey “is a data collection exercise rather than an impact study”, regulators said. QIS3, which will seek information on the impact of the whole Basel II Accord on banks, is due to go out to banks on October 1.

The op loss data from the tranche 2 survey should also help the regulators with the Basel Committee on Banking Supervision, the architect of Basel II, get a further insight into the way banks manage expected operational losses.

The Basel regulators decided some months ago that banks using the advanced approaches would not have to set aside capital against expected losses, where they can show clearly they have adequately budgeted for such losses.

Expected losses are those that are predictable, such as those arising year after year at a constant rate from credit-card fraud.

Technical experts with the Basel Committee’s risk management group, which is charged with developing the op risk proposals, agreed in Luxembourg this week on the June 1 date for the issue of the tranche 2 survey.

However, the date is subject to the proviso that the banking industry is happy with the format of the survey. The latest draft of the survey is being sent to the Washington-based Institute of International Finance, which represents banks, for comment. Any major revisions could delay the issue.

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• Topics
• Basel II
• Regulation
• Foreign exchange
• Exchanges
• Basel Committee
• Credit derivatives