WHAT IS THIS? The standardised measurement approach (SMA) is a method of assessing operational risk proposed by the Basel Committee on Banking Supervision in 2016 as a replacement for all existing approaches, including internal models. Critics have attacked the SMA as too blunt and backward-looking, delaying its approval.
Read Risk.net's coverage on the controversial move to the standardised measurement approach
The issues with the standardized measurement approach and a potential future direction for operational risk capital modeling
This paper discusses the criticism and praise the SMA and AMA have received, respectively, in many recent articles.
Battle to replace AMA with non-models approach was beset by nationalistic squabbles
Three regulators echo bank dismay as key principle of op risk capital framework is abandoned
Proposed forward-looking approach would permit internal modelling, but penalise banks if losses exceed estimates
Future of op risk modelling a hot topic at conference, along with evolving three lines of defence framework
Leaked proposals say loss component will be left to national regulators, threatening an unlevel playing field
The SMA is not a good response to the AMA’s failings – but don’t throw the baby out with the bathwater
High-profile critics of op risk capital rules are misguided, say Ariane Chapelle and Evan Sekeris
Ex-StanChart chief exec advocates replacing current op risk capital framework with regulator-set buffer
Revised op risk capital framework unlikely to be implemented uniformly, even when a deal is agreed, bankers say
This paper considers the claim of improved comparability of SMA outcomes by considering the ability to compare “internal loss experience” between banks.
New research adds to criticism of proposed op risk capital method
SMA could act as a floor for calculating op risk RWAs, suggests Filippo Curti
The author of this paper explores the reasons for the pending demise of the advanced measurement approach (AMA) to operational risk.
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Bump to operational risk capital under SMA could be bigger than expected, experts warn
Regulators could rescue op risk modelling through Pillar 2, writes former supervisor
Bayesian approach touted for mis-selling and other management failures
Modelling shift to 'crisis mode' mitigates pro-cyclical calculations
Lack of recognition in new SMA capital charge could cause market to shrink, worry insurers
Sfr270 million transaction by Credit Suisse and Zurich thought unlikely to be copied due to SMA
The AMA doesn’t make any sense – but the idea of a single, simple equation does, writes Ruben Cohen
Banks should “get clever and develop their own model” in response to SMA, says UK bank risk manager