Adios AMA: Basel proposal to bin op risk models worries banks
In December, the Basel Committee says it will propose scrapping the use of banks' internal models in calculating minimum capital for operational risk. Banks worry that such a move would discourage investment in op risk modelling and make the world a riskier place
Back in 2001, supervisors at the Basel Committee on Banking Supervision faced a tricky decision about how best to incorporate the emerging field of operational risk into their revised capital framework. Regulators had decided that, alongside market risk and credit risk, op risk ought to be reflected for the first time in Basel II. But how should the most sophisticated firms go about modelling it? Choosing a particular method would mean picking a winner from the range of different modelling
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