EBA欧洲银行-Metametris_6页_127kb

Summary of CEBS Compendium of Supplementary Guidelines on Operational Risk Implementation

Core Content

The document, "Comments on CEBS Compendium of Supplementary Guidelines on implementation issues of operational risk issued on December 19, 2008," is a formal response from Metametris to the CEBS guidelines. It highlights a critical oversight in the guidelines: the lack of consideration for the management of a bank's insurance program as a use test of its operational risk framework.

Main Points

1. Insurance Management as an Efficient Use Test

• Relevance to Operational Risk: Insurance management is identified as a highly effective use test for operational risk, addressing a significant portion of severity risk events.
• Third Party Involvement: Insurance companies act as third-party validators of a bank's risk management effectiveness, often intervening to improve safety and compliance.
• Senior Management Involvement: Insurance decisions are major financial choices made by senior management, which are closely tied to the bank's operational risk profile.
• Internal Allocation Tool: The internal allocation of insurance premiums is a practical and accepted risk management tool, offering transparency and incentives for better risk management practices.

2. The Need to Integrate Insurance into Operational Risk Management

• Current Regulatory Gap: The CEBS guidelines do not address insurance management, which is a key area for assessing the effectiveness of operational risk frameworks.
• Regulatory Misalignment: The artificial separation between risk and insurance in regulatory documents undermines the goal of Basel 2, which is to promote integrated risk management practices.
• Benefits of Integration: Integrating insurance into operational risk management would enhance the accuracy of risk assessment and capital calculation, as well as optimize premium expenses.

3. Risks of Artificial Slicing

• Missed Opportunities: Maintaining separate operational risk and insurance management units can lead to missed opportunities in risk management and cost optimization.
• Counterproductive Divisions: Artificial divisions in risk management, as seen in the case of US banks and structured credit products, have contributed to excessive risk exposure and fraudulent practices.
• Impact on Capital Allocation: These divisions may hinder the accurate capital allocation for asset management companies facing increasing fiduciary and market risk correlations.

Key Recommendations

• Avoid Artificial Division: Regulators should avoid encouraging or maintaining artificial divisions within risk management organizations.
• Support Integrated Practices: Support the integration of insurance management into operational risk management within banks.
• Explicit Inclusion in Guidelines: Recommend that insurance management be explicitly included in supervisory guidelines related to use test requirements and operational risk management best practices.

Conclusion

The document emphasizes the importance of treating insurance management as a core component of operational risk management, rather than a separate entity. It argues that this integration is essential for effective risk assessment, capital calculation, and overall risk management best practices in the banking industry.