6.3 How to Implement the Operational Risk Management Proposal ...

More documents

Recommendations

Info

Strengths of Basel II Proposal forOperational Risk Management• Increased transparency both at branch level and business linelevel will help to control operational risk.• Risk tolerance level could be set.• Implementation of Basel II will facilitate the transformationprocess of banking operation.-Management functioned by business line will be strengthened;-Give incentive to improve operational risk management andhenceforth to reduce operational losses.• Encourage banks to allocate more sources to strengthen theiroperational management.2009-1-13 13•China Version of Guidelines for theImplementation of Basel II• Three approaches recommended by CBRC-The Standardized Approach in China Version-The Alternative Standardized Approach-The Advanced Approach• No detail about AMA, reflecting low expectation forimplementation.2009-1-13 14•7
The Standardized Approach of CBRCThe total capital charge canbe expressed asKTSA=∑8{ GIjk× β ,0}∑3maxj= 1k=1k3No Big Difference!Standardized Approach Beta FactorsBusiness LinesBeta FactorsCorporate Finance 18%Trading & Sales 18%Retail Banking 12%Commercial Banking 15%Payments & Settlements 18%Agency Services 15%Asset Management 12%Retail Brokerage 12%Other Business 18%2009-1-13 15•The Alternative StandardizedApproach of CBRCTwo Choices under CBRC ASAOne is the same as ASA under Basel II, the otheris pretty much a short version.ASA Beta FactorsBusiness Lines Beta FactorsRetail Banking 12%*3.5%*aloCommercial Bankin 15%*3.5%*aloOther Business 18%2009-1-13 16•8
Page 2: Ho to Implement the Operational Ris
Page 7: Challenges for Operational RiskMana

6.3 How to Implement the Operational Risk Management Proposal ...

Create successful ePaper yourself

Delete template?

Save as template?