Topics in International Financial Regulation and Policy
Session 1: February 2, 4:00-5:30 pm, Taubman 301
Rethinking Operational Risk Capital Requirements
The current operational risk capital requirement regime under Basel III is deeply flawed. It consumes over $400bn in equity for the world’s top 30 banks, but is arbitrary, doesn’t create appropriate incentives and fails to provide loss absorbency. The Basel Committee has put forward proposals to revamp operational risk capital requirements, but these do little to address such flaws and actually make some aspects worse. So there is significant pushback from both industry and regulators. In this session, we will draw on our recently published working paper to discuss these issues and consider a radical alternative.
Peter Sands was Group Chief Executive of Standard Chartered Bank from November 2006 to June 2015. He joined the Board of Standard Chartered PLC as Group Finance Director in May 2002, responsible for Finance, Strategy, Risk and Technology and Operations. Prior to this, Sands was Director and Senior Partner at worldwide consultants McKinsey & Co. Before joining McKinsey, he worked for the United Kingdom’s Foreign and Commonwealth Office. Sands is the lead non-executive board member of the Department of Health in the United Kingdom and the co-chair of the India UK CEO Forum. He holds a number of board memberships including the World Economic Forum and Lingnan University and is Governor of the National Institute of Economic and Social Research. He graduated from Oxford University and holds and MPA from HKS (1988), where he was a Harkness Fellow. As a senior fellow, Sands’ research will explore a variety of topics related to banks and financial markets. His faculty sponsor is Richard Zeckhauser, Frank Plumpton Ramsey Professor of Political Economy. Email:email@example.com
M-RCBG Senior Fellow Peter Sands.