Erscheinung:05.11.2008 | Topic Own funds OpR Expert Group recommendation on the qualitative standards 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 qualitative standards 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) 1An institution which uses the Standardised Approach shall have an appropriate and documented system for identifying, assessing, monitoring, reporting on and controlling operational risk with clearly assigned responsibilities. 2An institution shall track relevant data on operational risks, including material losses. 3This system shall be subject to regular internal or external audit.
(2) The output of the operational risk assessment system shall be an integral part of the process of monitoring, reporting and controlling the institution's operational risk.
(3) The operational risk assessment system shall be closely integrated into the institution's risk management processes.
(4) 1The institution shall have an appropriate reporting system that provides meaningful information about operational risks to relevant functions within the institution. 2The institution shall determine decision-making competencies and channels so as to take appropriate action according to this information.
Explanatory comments
As a matter of general principle, the qualitative standards for the Standardised Approach (TSA) must be met at the applicant level. If a group of institutions as defined by section 10a of the German Banking Act (KWG) uses the TSA and the Basic Indicator Approach is used at the individual institution level, meeting the qualitative standards for the TSA at the group level is sufficient. However, the requirements of the Minimum Requirements for Risk Management (MaRisk) must still be met at the individual institution level even when the Basic Indicator Approach is used. Normally the TSA will be used at both the group of institutions level and the individual institutions level. In this case, as a matter of general principle the TSA standards will also have to be met at the individual institution level as well. Nevertheless, the resources of the group of institutions can be drawn on for the purposes of meeting the standards.
The scope of the qualitative standards that have to be met and of the supervisory scrutiny is determined according to the principle of double proportionality, i.e. according to the size and risk of the institution or business line. When implementing the qualitative standards, institutions and groups of institutions should classify their internal organisational units according to these criteria and base the respective scope of the qualitative standards on them.
The same criteria are to be applied to determining the scope of the qualitative standards that have to be met for the purposes of the TSA as are applied to determining the strictness of the requirements that have to be met under Section BTR 4 of the MaRisk.
