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Research shows op risk capital will surpass market risk capital

A new research paper from the Federal Reserve Bank of Boston shows that the amount of capital that will be set aside under the new Basel II rules "will often exceed capital held for market risk, and that the largest banks could choose to allocate several billion dollars in capital to operational risk."

The paper, Capital and risk: New evidence on implications of large operational losses, was posted on the Federal Reserve Bank of Boston’s website in early October. It follows on from another that was published in April of this year, Using loss data to quantify operational risk, by the same authors. Both papers use external data from databases owned by OpVantage, a subsidiary of FitchRisk, and

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Emerging trends in op risk

Karen Man, partner and member of the global financial institutions leadership team at Baker McKenzie, discusses emerging op risks in the wake of the Covid‑19 pandemic, a rise in cyber attacks, concerns around conduct and culture, and the complexities of…

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