Operational Risk Capital May Be Reviewed
By Nicholas Dunbar
Regulators may look to increase the capital that banks have to hold against
operational risk, after months of algorithmic trading glitches, regulatory probes into money laundering, market manipulation and admissions of weak risk governance, analysts said.
“It wouldn’t be a surprise if regulators increased operational risk capital charges in the light of some of the issues reported by banks in recent months”, Daniel Davies of Exane BNP Paribas said in an interview.
The Basel Committee for Banking Supervision defines operational risk as “the
risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events”. Under Basel III, which the Federal Reserve plans to implement in the U.S., banks have to anticipate such losses and hold equity capital against the risk.