Regulatory Alerts2014-07-28
Application Process to Adopt the Advanced Measurement Approach for Measuring Banks' Operational Risk Exposure
The South African Reserve Bank’s Office of the Registrar of Banks issues this guidance to outline the mandatory application process for financial institutions seeking prior written approval to adopt the Advanced Measurement Approach for operational risk capital calculation. Banks must notify the regulator at least six months in advance, submit a comprehensive application pack detailing governance, implementation plans, and self-assessments, and undergo a review period of up to 18 months that may include parallel run reporting. The directive also explicitly prohibits institutions from reverting to simpler risk measurement methodologies once a sophisticated approach has been approved without obtaining fresh regulatory consent.
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