Response to consultation on ITS amending Implementing Regulation (EU) No 680/2014 with regard to operational risk and sovereign exposures

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Question 1: Could you please quantify both the implementation costs and recurring production costs (expressed in man days) that would arise when implementing the changed reporting requirements on OpRisk as part the regular reporting framework? How would these recurring production costs compare to a situation in which institutions were required to comply with ad-hoc data requests that are required to comply with current competent authorities’ requests on institutions’ OpRisk losses (e.g. SSM short-term exercise)? [see page 16]

Feedback received from some ESBG members suggests that the implementation costs of C17.01 would be 2 people/day, with recurring production costs of 0.5 people/day. These costs, members have opined, are similar to other requests like the SSM short-term exercise.
In relation to the costs of the new reporting template C17.02, members are less certain but estimate, without a large degree of confidence that it would result in similar costs.

Question 6: Are the reporting templates related to OpRisk losses (C 17.01 and C 17.02) as set out in Annex I and the related instructions in Annex II sufficiently clear? In case of uncertainties on what needs to be reported, please provide clear references to the respective columns/rows of a given template as well as specific examples that highlight the need for further clarifications. [see page 19]

ESBG members have stressed the importance of providing detailed examples illustrating how to fill the rows 930 to 934 (number of events subject to loss adjustments) and rows 941 to 944 (loss adjustments by size of the loss). From responses received it is also clear that there is a need for detailed examples to be provided on how to incorporate, in all templates, negative data, and how to manage the losses under the €10,000.00 threshold.

Question 7: Are the rules for the assignment of loss adjustments to ranges as defined for rows 940 to 944 sufficiently clear? In case of uncertainties, please provide suggestions to improve the clarity and/or effectiveness of the reporting instructions for loss adjustments. [see Annex II, page 7]

The assessment of the current text is that it leaves room for interpretation. In order to avoid ambiguities detailed examples for reporters on how to report different situations must be provided.

Question 8: Are the new rules for the determination of the number of loss events subject to loss adjustments for certain ranges of gross loss amounts as defined for rows 931 – 934 and the rules for the assignment of loss adjustments to ranges as defined for rows 940 to 944 appropriate in terms of cost/benefit? Please try to quantify the cost impact and put it into context with the overall implementation costs that you expect with the changed reporting requirements on OpRisk. [see Annex II, page 7]

The view has been expressed by ESBG members that, both the risk of error and the costs of implementation outweigh the possible benefit of the proposed method of reporting loss adjustments. As with all new developments in these areas the substantial cost to the reporter must be justified by the benefit received.

Question 9: Which option as regards the threshold for OpRisk loss events is the least complex or least costly in terms of implementation? [see Annex II, page 8]

Members are of the opinion that, regarding paragraph 139, options “a” and “b” are the least costly.

Name of organisation

ESBG - European Savings and Retail Banking Group