OSFI Revises Capital Requirements for Operational Risk for Banks

Consistent with Guideline E-21 on operational risk management, OSFI expects larger, more complex banks to continue using internal and external loss data and scenario analysis in their operational risk management frameworks. However, banks currently using the AMA approach will no longer be required to use Business Environment and Internal Control Factors in their operational risk management frameworks after the fourth quarter of 2019. To facilitate implementation of the revised operational risk capital requirements, OSFI will provide a transition period for deposit-taking institutions currently using the AMA for operational risk capital purposes. During the transition period, deposit-taking institutions currently approved to use AMA for capital reporting should report operational risk capital as follows:

• For up to and including the fourth quarter of 2019, report using the AMA approach
• From first quarter of 2020 to the fourth quarter of 2020, report using the current Standardized Approach outlined in Chapter 8 of the Capital Adequacy Requirements Guideline of OSFI
• Starting from the first quarter of 2021, report using the revised Basel III Standardized Approach

Related Links

• Notification
• Guideline E-21

Keywords: Americas, Canada, Banking, Operational Risk, Advanced Approaches, Basel III, Regulatory Capital, Guideline E-21, OSFI