CP10 (Full Document) - European Banking Authority

· The roll­out plan should have a definite time horizon. It should be
short enough in order to avoid prolonging AMA applications
unduly, and long enough to ensure the quality of governance,
data, methodology, and output.
· The sequence in which operations are included in the AMA can be
chosen by the institution, if agreed by the supervisor, starting, for
example, with the riskier of the remaining operations.
431. Once a decision to grant AMA approval to a firm is taken, no further
formal Article 129 process will be required as a result of roll­out of
the AMA. During the roll­out period, however, supervisors will cooperate
in the spirit of Article 129. As the AMA is rolled out,
supervisors may want to satisfy themselves that the minimum
standards of the CRD are being met with respect to the additional
operations or additional operational risks covered by AMA roll­out. To
facilitate this process, institutions should complete a self­assessment
against the minimum standards prior to rolling out the AMA to
additional operations or additional risks. Supervisors will have three
options, and will specify in the decision document which option or
mixture of options is being used. Conditions may need to be attached
to the decision in order to give effect to the option or options
selected. The three options are:
1. Relying on normal supervisory activity to verify that minimum
standards are met. Although formal prior notification
requirements will not be introduced, other than the roll­out plan,
institutions will be expected to keep supervisors informed of plans
and developments in their risk measurement and management
practices. Although an ex­ante assessment by supervisors will not
be a formal requirement, supervisors may nevertheless choose
to undertake an assessment of the operational risk measurement
system in the period before the institution starts to use it for
regulatory capital purposes.
2. Asking institutions to notify supervisors on a timely basis of their
intention to roll out the AMA to additional operations or additional
operational risks. As with (1), although an ex­ante assessment by
supervisors will not be a formal requirement, supervisors may
nevertheless choose to undertake an assessment of the
operational risk measurement system in the period before the
institution starts to use it for regulatory capital purposes.
3. Asking institutions to notify supervisors on a timely basis of their
intention to roll out roll out the AMA to additional operations or
additional operational risks, and perhaps requiring institutions to
receive explicit permission before extending the use of the AMA.
In this case, a prior assessment by supervisors may be required
before permission is granted.
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