CEBS Compendium of supplementary guidelines on implementation issues of operational risk

08 September 2009

The Committee of European Banking Supervisors (CEBS) today publishes its "Compendium of supplementary guidelines on implementation issues of operational risk" (the Compendium) and a feedback document following a three-month consultation period on CP21 and a related public hearing.

After the publication of the Guidelines on the implementation, validation and assessment of the AMA and IRB Approaches in April 2006 (GL10), CEBS has continued working on issues arising from the implementation of the AMA, Standardised (TSA/ASA) and Basic Indicator (BIA) approaches for operational risk. The outcome of this work feeds into the Compendium which serves as a regularly updated Guidebook of documents produced by the CEBS to address identified issues and to support the work of the national authorities in their assessment and review of the operational risk frameworks implemented by institutions.

The published version of the Compendium contains the first set of guidance papers, namely "The scope of operational risk and operational risk loss", "The use test for AMA firms" and "The allocation of the AMA capital".

In drafting its Compendium, CEBS received input from the industry. In general respondents supported the aim of the Compendium to achieve greater convergence of supervisory practices and consistency within and across banks in operational risk, in particular in those areas which have received little attention in the CRD and previous CEBS documents.

Most of the comments were directed at the first document in the Compendium (the Scope Guidelines). In order to accommodate the industry's comments the document has been revised, by clarifying the criteria and examples for including or excluding cases from the scope of operational risk with respect to market risk or strategic risk. Moreover, the meaning and the terminology of pending losses and timing impacts have been clarified and their use restricted to AMA institutions for management and measurement purposes. As to near misses, operational risk profits/gains and opportunity costs/lost revenues, CEBS has introduced a proportionality principle and clarified that these items are mainly useful for management purposes.

For further details, please refer to the feedback table published with the Compendium.

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Franca Rosa Congiu

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