Erscheinung:05.11.2008 | Topic Own funds OpR Expert Group recommendation on the collection of relevant data in the Standardised Approach (of 05.03.2008)
Preliminary remark
In its mandate the OpR Expert Group set itself the task of drawing up proposals for how the latitude that exists in the national implementation of the Basel and Brussels rules on operational risk might be utilised. The following Expert Group recommendation is a suggestion for regulating the collection of data in the Standardised Approach. The recommendation is subject to its being consistent with the decisions taken at the European level.
Please note:German version is binding
This translation is furnished for information purposes only and may refer to an older version of the text. The original German text is binding in all respects.
Section 276 of the Solvency Ordinance (as of 01.01.2007)
Qualitative standards
(1)2Institutions shall track relevant data on operational risks, including material losses.
Explanatory comments
In the Standardised Approach, relevant data, including any such relating to material losses, must be collected in order to obtain information on operational risk relevant to controlling that risk. The definition of a "material loss" and of other relevant data is left to the discretion of each particular institution, but shall, however, have regard for the criterion of proportionality. The definition of operational risk set out in section 269 (1) of the Solvency Ordinance must be taken into account for this purpose. A consistent definition of "material losses" must apply throughout the institution and be communicated at all levels. Suitable estimates of individual data items are permissible if it is not possible to determine them precisely. The following minimum information on material losses is relevant for risk management purposes:
the amount of any loss that has occurred and the nature and amount of any repayments;
the business area/s in which the loss occurred or which is/are affected by the risk event;
a description of the cause or drivers of the loss;
the dates of occurrence and detection of the loss event.
The description of the cause or drivers of the loss should as a minimum enable the loss experience to be diagnosed.
The collection of data may go beyond the simple capturing of "material losses". The recording of additional data on losses, especially at larger or complex institutions and institutions that are endeavouring to move on to the advanced approaches, is to be recommended. Institutions that are seeking to develop an AMA should be guided by the data requirements for the AMA (sections 286 and 287 of the Solvency Ordinance) in order to build up the necessary loss data history (section 286 (1) of the Solvency Regulation).
The data must be collected in a manner that ensures the integrity and availability of the data and enables the data to be analysed for risk management purposes at any time. Although the supervisory authority does not explicitly require losses to be captured and processed electronically on a database, this is advisable, depending on the amount of data and the size and complexity of the institution.
The information obtained from the collection of loss data must be incorporated in the internal reporting system in an appropriate manner. These reports should include measures to limit the loss that has occurred and possible measures to prevent future losses. Exceptional reporting channels (ad hoc reports) should be in place in order to pass on information on particularly large losses.
