New Basel IV Proposals to Revolutionize Operational Risk Capital Calculation.
The article compares different ways of calculating capital needed to cover operational risks in the banking industry. It discusses how changes in the business environment have led to the need for a regulatory framework to manage these risks. Despite an increase in operational risk events, capital requirements have remained stable or even decreased for some banks. To address this, a new Standardized Approach was introduced in 2015. The paper also looks at the new Basel IV proposals for setting capital charges for operational risk.