In June 2011 the Basel Committee on Banking Supervision (BCBS) published its Principles for the Sound Management of Operational Risk (the Principles) to provide guidance to banks on the management of operational risk.

Earlier this year the BCBS conducted a review concerning banks’ implementation of the Principles. The review covered 60 systemically important banks in 20 jurisdictions. It took the form of a questionnaire against which the banks self-assessed the extent and quality of their implementation.

The BCBS has now published a paper setting out its findings from the review. In summary, implementation of the Principles across banks has varied significantly and more work is needed to achieve full implementation. In particular, the following four Principles are the least thoroughly implemented:

  • operational risk identification and assessment;
  • change management;
  • operational risk appetite and tolerance; and
  • disclosure.

View Review of the principles for the sound management of operational risk, 6 October 2014