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Operational risk under Solvency II: A brief overview of current approaches

27 July 2012

As companies implement Solvency II programs, operational risk, often seen as a catch-all for ‘other’ risks, is being recognized as having greater impact than was previously realized.

Management of operational risks—and preparing companies to handle these risks—is now seen as a key aspect of sound insurance management.

Operational risk is also moving up companies’ agendas because the capital charge under the Solvency II Pillar I standard-formula calculation is a rough measure—it is essentially based on business volumes. While this has the benefit of simplicity, it may lead to what could be considered excessive capital requirements.

This paper provides a brief summary of how companies are currently approaching operational risk under Solvency II, and gives some suggestions for improvements using innovative techniques.


About the Author(s)

Jeremy Kent

Henny Verheugen

Amsterdam Insurance and Financial Risk | Tel: 31 6 10149938

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