EU Consultation on Draft Technical Standards for Operational Risk Loss under Third Capital Requirements Regulation

The European Banking Authority has opened a consultation on a package of draft regulatory technical standards that aim to standardize the collection and the record of operational risk losses and to provide clarity on the exemptions for the calculation of the annual operational risk loss and on the adjustments to the loss data set that banks must perform in case of merged or acquired entities or activities. The package consists of:

• Draft RTS on establishing a risk taxonomy on operational risk, which provide a list of operational risk event types, categories, and attributes that institutions must use when recording operational risk loss events in line with the current framework and the international standards.
• Draft RTS on the conditions under which it would be unduly burdensome for an institution to calculate the annual operational risk loss. In such cases, the draft RTS allow for a temporary waiver from the requirement to calculate the annual operational risk loss.
• Draft RTS on the adjustments to an institution's loss data set following the inclusion of losses from merged or acquired entities or activities, which provide indications on the currency and the risk taxonomy to be used when incorporating the loss data set of merged entities or activities.

The deadline for comments is September 6, 2024. The EBA intends to finalize the draft RTS by the end of 2024.

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