U-turn on SMA comparability sparks anger

Three regulators echo bank dismay as key principle of op risk capital framework is abandoned

Risk 0717 In Depth Herald, Mark Long
Mark Long, nbillustration.co.uk

This article is the second in a series focusing on proposed reforms of the operational risk capital framework; the first can be found here.

Simplicity, comparability, risk sensitivity. The Basel Committee on Banking Supervision identified these three principles as the foundations of its standardised measurement approach (SMA) for operational risk capital when it was first unveiled in March 2016. Yet fast forward a year, and all three appear to have been jettisoned in the pursuit of a compromise

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