From Pillar to Pillar… to post: where now for op risk in Europe?
Experts think enhanced Pillar 2 charge informed by Dora would be more useful than a blunt Pillar 1
It’s not simply about the capital cushion. From inception, a major objective of the Basel capital framework has been to incentivise good measurement and management of the individual risk types.
But since the Basel Committee on Banking Supervision finalised the bulk of the Basel III framework in 2017, there have been growing complaints that the operational risk charge is simply too crude to achieve this fundamental goal. In Europe, this criticism is reaching a tipping point.
“The most
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