Hybrid approach not 'dead in the water'

BASEL, SWITZERLAND – An official from the Bank for International Settlements reacted with anger over the publication of last month's cover story in OpRisk & Compliance magazine about the use of the hybrid approach among both regulators and financial services firms. The official described the article – which indicated that support for the hybrid approach for the advanced measurement approach to capital allocation was flagging – as "not helpful" to the dialogue between firms and the committee.

The comments come at the time when the UK has changed its position on the hybrid approach in its latest consultation paper on the Capital Requirements Directive (CRD), published in late February. The softening of the Financial Services Authority's stance on the home-host framework could help revive the methodology.

The hybrid approach under the advanced measurement approach of Basel II was first