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IBFed Response to the Consultation on Operational Risk - Revisions to the Simpler Approaches

6 Jan 2015

We appreciate the opportunity to review the Basel Committee's consultative document, “Operational risk - Revisions to the simpler approaches”. We recognize the work of the Basel Committee to develop a new approach in order to streamline the framework and address weaknesses identified in the existing approaches.

We understand that the Basel Committee is considering whether or not to replace the current non-model-based approaches with the proposed Business Indicator (BI) approach. However, we are concerned that the proposed approach is much more complex than it might at first appear, and despite this complexity is not sophisticated enough to incorporate known risk drivers. We believe that implementing the proposed approach will burden banks’ existing resources with little benefit in terms of improvement in risk measurement or risk management capabilities or practices. We recommend that the Basel Committee reconsider the proposed approach.

IBFed Response to the Consultation on Operational Risk - Revisions to the Simpler Approaches
 
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