ABA sets up new op risk committee

The American Bankers Association (ABA) has created a new operating risk committee to help bankers reduce losses and comply with new capital requirements laid out in Basel II, the new regulatory capital accord being devised by the Basel Committee on Banking Supervision.

The ABA committee includes senior managers at 10 US banks and aims to boost its numbers over the coming months. Top of the committee’s agenda is to develop a peer group reporting programme designed to collect, analyse and compare participating banks’ op risk events. This will take place on a confidential basis and include data related to robbery, workplace safety, internal fraud and computer security.

The timeframe should give participating banks three years of benchmark data ahead of the introduction of Basel II, expected in late 2006. The risk-based Basel II capital accord will require internationally active banks to ensure they are fully protected against operational risks for the first time.

“The ABA has a proven record of confidential data collection and analysis in areas such as cheque fraud,” said Robert Jones, director of op risk management at FleetBoston Financial, who will chair the ABA operating risk committee. “Better data will help banks develop better strategies to reduce losses, and will help banks develop more efficient methods for determining their capital reserves.”

The ABA move comes as Charles Taylor was made director of operational risk at the 88-year-old Risk Management Association (RMA). Based in Philadelphia, the 3,000 member RMA caters primarily to US commercial banks, community banks and some global investment banks (see: US Risk Management Association appoints new operational risk head).

Founding members of the ABA’s op risk committee are: Bank of America, BB&T, Comerica, First Tennessee, FleetBoston, Hibernia, Key Bank, National City, Wachovia and Zions.