Discarding the AMA could become a source of op risk

Back in time: Basel Committee's SMA proposals are a 'backward step'

Ariane Chapelle, Bertrand Hassani, Gareth W Peters, Evan Sekeris, Pavel Shevchenko
17 Mar 2016

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On March 3, the Basel Committee on Banking Supervision published a long-awaited consultative document on its new standardised measurement approach (SMA) to operational risk.

In light of well-documented problems with the advanced measurement approach (AMA), the Basel Committee proposes some radical and ill-conceived reforms. It would replace the AMA – the own-models approach to operational risk used by more sophisticated banks – with a simplistic metric for regulatory capital. Broadly, that

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