Risk.net
Insurance payouts could allow banks to pare back capital without equivalent reduction in risk, says paper
Banks could be left without sufficient capital to cover fat-tailed risks such as a natural disaster Print this page
Recent research has reignited debate over how banks use insurance to reduce operational risk capital, with experts warning that incoming rules may encourage firms to “arbitrage” the system.
The standardised approach for operational risk allows banks to deduct insurance payouts from their op risk capital calculation. Marco Migueis, an economist with the US Federal Reserve Board, says this may incentivise banks to insure predictable, small-ticket op risk losses at the expense of large, black-swan
Risk.net Print this page
Aggregate risk-weighted assets (RWAs) at Canada’s top lenders barely edged up over the 12 months to end-January. However, the slight overall rise masked a big increase in those RWAs linked to counterparty credit risk (CCR) and operational risk.
CCR RWAs across BMO, CIBC, RBC, TD Bank and Scotiabank hit C$134 billion ($106 billion) in aggregate at end-January, up 9% on the year prior. These increased the most at RBC, by 22% to C$56.9 billion.
Op RWAs at the ‘Big Five’ jumped 5% over the same
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Risk.net
The biggest op risks for the year ahead, as chosen by senior industry practitioners
Welcome to
Risk.net’s annual ranking of the top op risks for 2021, based on a survey of operational risk practitioners across the globe and in-depth interviews with respondents.
As in years past, there is no great secret to the methodology:
Risk.net’s editorial team gets in touch with 100 chief risk officers, heads of operational risk and senior practitioners at financial services firms, including banks, insurers, asset managers and infrastructure providers, and asks them to list their five most pressing op risk concerns for the year ahead. The results are then weighted and aggregated, and are presented in brief below and analysed in depth in 10 accompanying articles.