Regulatory Alerts2022-03-28 | CBE3.1CBE Regulation Book 3.1 - Capital Adequacy Standard Operational Risks Using The Standard Method
The Central Bank of Egypt's board of directors decided to adopt the Basel Committee on Banking Supervision's best practices for banking supervision. Banks are required to apply the following regulatory instructions regarding operational risk using the standardized approach. Banks are given until December 31, 2021 to align with the new requirements. The standardized approach (SA) for operational risk will replace the current basic indicator approach. The instructions are part of the Basel III regulatory framework. All banks are required to adopt the standardized approach to calculate their regulatory capital requirements for operational risk. The approach simplifies the regulatory framework and addresses weaknesses in the previous four approaches allowed by the Basel Committee. It combines the bank's business indicator and the bank's operational risk losses to calculate the required regulatory capital. The approach also improves the sensitivity of the framework to risk and enhances comparability of bank results across banks and countries.