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Operational Risk for Asset Managers Introduction Bruce Offergelt.

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Presentation on theme: "Operational Risk for Asset Managers Introduction Bruce Offergelt."— Presentation transcript:

1 Operational Risk for Asset Managers Introduction Bruce Offergelt

2 Basel Definition “The risk of loss from inadequate or failed internal processes, people and systems or from external events”

3 FSA Rules Qualitative guidance -Senior Management Arrangements, Systems and Controls (SYSC) -Integrated Prudential Sourcebook (PRU) Quantitative requirement - prudential capital adequacy requirements to be finalised

4 Qualitative Policy Timetable Feedback on CP142 issued March 2003 Near-Final Handbook Text later 2003 Implementation 2004 (12 months later)

5 Capital Adequacy Framework  Risk Based  Income used as proxy for Operational Risk  Capital Requirement = Income x Risk Calibration Factor  3 approaches  Basic Indicator  Standardised  Advanced Management Approach (AMA)

6 Quantitative Timetable Basel CP3May 2003 EU CAD3June 2003 FSA CP on ImplementationJuly 2003 AccordOct 2003 Draft PSB TextMid 2004 ImplementationEnd 2006

7 Issues Criteria Calibration Factors Future role of EBR Incentivisation Partial Use Role of Insurance

8 Next Steps Publication of CP3 and EU CAD3 Data collection for asset managers


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