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    BCBS FAQs on Implementation of Operational Risk Capital Requirements

    August 14, 2019

    BCBS published the first set of frequently asked questions (FAQs) to facilitate consistent global implementation of the standardized approach for operational risk capital. BCBS had finalized the standardized approach for operational risk capital in December 2017. The Committee plans to periodically review the FAQs and publish answers, along with any technical elaboration of the standards text and interpretative guidance that may be necessary.

    This document presents a set of seven FAQs that relate to the new standardized approach for operational risk capital. The note also includes the reasoning for the FAQ text that has been drafted on these issues. The FAQs cover the following topics:

    • Treatment of non-performing loans in the Business Indicator (BI)
    • Timeline for exclusion or inclusion of losses and BI items after divestiture or deconsolidation and acquisition or merger
    • Conversion of losses from foreign subsidiaries into local currency
    • Treatment of refunds due to overbilling resulting from an operational failure
    • Treatment of losses from outsourced activities

     

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    Keywords: International, Banking, Basel III, FAQ, Operational Risk, Capital Requirements, Standardized Approach, BCBS

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