Operational Risk - Optional Reading

[MM360]

Hi, In the 2016 Learning objectives it lists

Optional Regulatory Readings for Reference
Candidates are expected to understand the objective and general structure of important international regulatory
frameworks and general application of the various approaches for calculating minimum capital requirements, as
described in the readings above. Candidates interested in the complete regulatory framework can review the following:
“Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework—
Comprehensive Version,” (Basel Committee on Banking Supervision Publication, June 2006).* [OR-21]
“Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems—Revised Version,” (Basel
Committee on Banking Supervision Publication, June 2011).* [OR-22]
“Basel III: The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools,” (Basel Committee on Banking Supervision
Publication, January 2013).* [OR-23]
“Revisions to the Basel II Market Risk Framework—Updated as of 31 December 2010,” (Basel Committee on Banking
Supervision Publication, February 2011).* [OR-24]
“Basel III: the net stable funding ratio.” (Basel Committee on Banking Supervision Publication, October 2014).* [OR-25]

However in the study planner there are questions for the above reading - i understand that the above help solidify the Basel LOs but are these required for the exam?

Apologies if this has already been posted.

 

[David Harper CFA FRM]

Hi @MM360 GARP just moved these BIS readings to an optional designation in 2016 (in 2015 all of the above, expect for the last NSF ratio reading were assigned!). The rationale is that (i) actual exam questions tend not to drill too deeply into Basel 2/2+/3, (ii) the Hull assignment is a good overview, and (iii) much of the above is very detailed. Technically, they are designated optional for a reason; i.e., they should not be "required" for the exam.

However, I would nevertheless recommend, if possible, the following:

• Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems—Revised Version,” (Basel Committee on Banking Supervision Publication, June 2011)
• Basel III: The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools,” (Basel Committee on Banking Supervision Publication, January 2013)
• Minimum capital requirements for market risk (January 2016) http://www.bis.org/bcbs/publ/d352.htm which is a critical update to Revisions to the Basel II Market Risk Framework—Updated as of 31 December 2010,” (Basel Committee on Banking Supervision Publication, February 2011)
• Basel III: the net stable funding ratio." (Basel Committee on Banking Supervision Publication, October 2014)

i.e., the entire list except for the June 2006 Basel II document, which is very large (overwhelming at first glance) and should not be necessary in light of the Hull overview. I hope that's helpful! Thanks,

 

[MM360]

Thanks for the reply David. I will try to cover the above before the exam to solidify my learning.
Just didn't realise how much more material there is in part 2 compared to part 1 - especially while working.

 

[a.bologna295]

Hi David,

I hope you are fine.

I downoladed the study guide from the GARP website and noticed that the following chapters in the operational risk part are marked as optional:

“Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework— Comprehensive Version,” (Basel Committee on Banking Supervision Publication, June 2006).*

“Basel III: A global regulatory framework for more resilient banks and banking systems—revised version,” (Basel Committee on Banking Supervision Publication, June 2011).*

“Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools,” (Basel Committee on Banking Supervision Publication, January 2013).*

“Revisions to the Basel II market risk framework—updated as of 31 December 2010,” (Basel Committee on Banking Supervision Publication, February 2011).*

“Basel III: the net stable funding ratio.” (Basel Committee on Banking Supervision Publication, October 2014).* “Minimum capital requirements for market risk” (Basel Committee on Banking Supervision Publication, January 2016).*

“Basel III: Finalising post-crisis reforms,” (Basel Committee on Banking Supervision Publication, December 2017).*


In your notes there are many exercises related to these chapters. As per your experience,do you think they could be easily testable?

Thanks a lot,
Adele

 

[Nicole Seaman]

Hi David,

I hope you are fine.

I downoladed the study guide from the GARP website and noticed that the following chapters in the operational risk part are marked as optional:

“Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework— Comprehensive Version,” (Basel Committee on Banking Supervision Publication, June 2006).*

“Basel III: A global regulatory framework for more resilient banks and banking systems—revised version,” (Basel Committee on Banking Supervision Publication, June 2011).*

“Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools,” (Basel Committee on Banking Supervision Publication, January 2013).*

“Revisions to the Basel II market risk framework—updated as of 31 December 2010,” (Basel Committee on Banking Supervision Publication, February 2011).*

“Basel III: the net stable funding ratio.” (Basel Committee on Banking Supervision Publication, October 2014).* “Minimum capital requirements for market risk” (Basel Committee on Banking Supervision Publication, January 2016).*

“Basel III: Finalising post-crisis reforms,” (Basel Committee on Banking Supervision Publication, December 2017).*


In your notes there are many exercises related to these chapters. As per your experience,do you think they could be easily testable?

Thanks a lot,
Adele

Hello @a.bologna295

I've moved your post to this thread, which already discusses the Basel optional readings. There is also another thread here (among others) that should be helpful: https://forum.bionicturtle.com/threads/basel-optional-readings.9488/. We ask that all of our members make sure to use the search and tag functions that are available in the forum to make sure that their question has not already been answered. The forum gets VERY busy right before the exam and it is difficult (impossible really) for David to answer all of the questions that are asked. We want to make sure everyone received answers to their questions, so searching the forum is very useful

Thank you,
Nicole