Regulatory AlertsGPS 118 Capital Adequacy: Operational Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard GPS 118 to require general insurers and Level 2 insurance groups to maintain adequate capital against operational risks. The standard mandates the use of a prescribed Standard Method to calculate the minimum Operational Risk Charge based on written premium revenue and insurance liabilities. This requirement ensures regulated institutions hold sufficient capital to cover losses from failed internal processes, people, systems, or external events.
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