Regulatory Alerts2008-11-05 | OpR Experts Group recommendation on the recognition of insurance in advanced measurement approaches (of 05.03.2008)OpR Expert Group Recommendation on Recognizing Insurance in Advanced Measurement Approaches
The OpR Expert Group recommends that financial institutions recognize insurance and other risk transfer mechanisms to reduce operational risk capital requirements by up to twenty percent under advanced measurement approaches. Institutions must ensure eligible providers hold adequate credit ratings, maintain contracts with at least one-year initial terms and ninety-day cancellation notice periods, and lay off risks to independent third parties if part of a consolidated group. The framework further requires appropriate haircuts for coverage mismatches and short-term policies, alongside transparent documentation that aligns with the institution's underlying risk data and modeling assumptions.
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