Terms of reference


Purpose of Group

The ORSG is a pre-consultation forum for discussing:

  • Operational Risk policy issues arising from the revised Basel Accord ('Basel') and the Capital Requirements Directive (CRD);
  • The FSA's requirements in the prudential sourcebook for Operational Risk (BIPRU);
  • Issues regarding the practical implementation and monitoring of compliance with Operational Risk policy in BIPRU, and;
  • Domestic Operational Risk issues not covered by Basel or the CRD.

The ORSG will be the means by which the FSA will:

  • Discuss its approach to, and process for, developing rules and guidance to implement the CRD for Operational Risk;
  • Collaborate with firms to address issues of policy implementation, and the monitoring of compliance with Operational Risk policy in the CRD.

Remit

The ORSG will be responsible for the following topics:

  • The Basic Indicator Approach to Operational Risk
  • The Standardised Approach to Operational Risk
  • The Advanced Measurement Approach to Operational Risk
  • Operational Risk in the SYSC sourcebook.
  • Operational Risk in Solvency II

 

Responsibilities

The FSA will:

  • Ensure that issues raised by firms are given proper consideration, are discussed at the appropriate level within the FSA, and that appropriate action is taken to address them;
  • Share with the ORSG members its policy proposals and rationale;
  • Highlight and discuss implementation issues;
  • Ensure that firms' views on policy options are factored into the FSA's on-going negotiation in respect of Operational Risk in Basel and the EU;
  • Circulate minutes from the meeting, comprising action items for the FSA and ORSG members;
  • Propose a draft agenda for the next meeting
  • Publish on its website the final version of the ORSG minutes;
  • Supply ORSG members with the agreed meeting agenda;
  • Provide policy papers explaining the CRD policy issues that the FSA is seeking to resolve and the proposed solutions to them.

The ORSG members are responsible for:

  • Providing views on the appropriateness and practicality of the FSA's proposed solutions to policy issues;
  • Where proposals are considered inappropriate or impractical, offering alternative solutions to policy issues in respect of CRD operational risk implementation in BIPRU;

Meeting frequency

ORSG meetings will be held every two months. Ad hoc meetings may be held where necessary.

Circulation of ORSG papers

ORSG members are free to circulate papers within their organisations and, in the case of trade associations, around trade association members in order to gauge industry views.