The European Banking Authority (EBA) has published a Consultation Paper on draft regulatory technical standards (RTS) assessing the criteria that national competent authorities (NCAs) need to consider before granting institutions permission to use advanced measurement approaches (AMA) for calculating their capital requirements for operational risk. The draft RTS:

  • detail the assessment methodology to be used by NCAs for operational risk AMA models;
  • clarify the scope of operational risk, as well as the scope of operational risk loss, and specify common standards for the supervisory assessment of a bank’s operational risk governance with respect to the role and responsibilities of the operational risk management function and the reporting system;
  • lay down criteria for the supervisory assessment of the key methodological components of the operational risk measurement system; and
  • establish criteria for the supervisory assessment of banks’ data quality and IT systems, requirements and terms for the “use test” and terms and the scope of audit and internal validation of the AMA framework.

Comments on the draft RTS are requested by 12 September 2014. The EBA is required to submit the draft RTS to the European Commission by 31 December 2014.

View Consultation Paper – Draft regulatory technical standards on assessment methodologies for the advanced measurement approaches for operational risk under article 312 of Regulation (EU) No 575/2013, 12 June 2014