Industry calls for new approach to op risk capital
Industry commentators are calling for a complete overhaul of Basel II’s advanced measurement approach. But do the problems lie with regulations, or with banks’ implementation of the approach?
The advanced measurement approach (AMA) for operational risk is approaching crisis point. Industry and regulators still disagree about fundamental aspects of it, and many in the industry are calling for AMA capital modelling to be abandoned altogether. While it is unlikely this will happen, it does seem probable that the AMA will be overhauled over the next year or two by regulators.
The Basel
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