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Op Risk Capital: Don’t Loathe It, Change It!

Op Risk Capital: Don’t Loathe It, Change It!

by Peter Hughes

Senior Advisor, Risk Accounting Standards Board and Author, Risk accounting: The complete guide to quantifying and accounting for non-financial risks

Nov 30, 2023


“Why bank CEOs loathe op risk capital” was a headline in an April 2017 Risk.Net article that left readers in no doubt what bank CEOs truly feel about one aspect of the regulatory capital regime. In this article, Peter Hughes suggests that bank CEOs should be pressing their own organizations to find a solution.

The CEOs who protested the loudest in the Risk.Net article referred to above were JPMorgan Chase’s Jamie Dimon and former CEO of Standard Chartered, Peter Sands. Their conclusion was that the regulators’ approach to calculating the amount of capital to be set aside to buffer future op risk losses doesn’t help the cause of proactive risk management and should be scrapped.

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