Discarding the AMA could become a source of op risk
Basel Committee's "tantrum-like reaction" is not supported by evidence, say practitioners
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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