Regulatory Alerts2025-09-11
Capital Adequacy Requirements (CAR) Chapter 3 – Operational Risk
The Office of the Superintendent of Financial Institutions establishes operational risk capital requirements for federally regulated Canadian banks, trust companies, and loan companies. Institutions must calculate capital charges using either the Standardized Approach or the Simplified Standardized Approach, with Category I deposit-taking institutions above a $1.5 billion Adjusted Gross Income threshold mandated to use the former. The guideline mandates robust 10-year loss data collection, defines operational risk as losses from failed processes, people, systems, or external events, and applies an Internal Loss Multiplier to scale capital requirements based on historical loss experience.
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