• PRU 6.11 PRU 6.11 Operational Risk Capital Requirement

    • PRU 6.11.1

      This Section applies to an Authorised Person in Category 1, 2, 3A or 5.

    • PRU 6.11.2

      (1) An Authorised Person must, subject to (2), use the Basic Indicator Approach as prescribed in App6 to calculate its Operational Risk Capital Requirement.
      (2) An Authorised Person may, with the written approval of the Regulator, use the Standardised Approach or the Alternative Standardised Approach, both as prescribed in App6, to calculate its Operational Risk Capital Requirement if the Regulator is satisfied that:
      (a) its Governing Body and senior management, as appropriate, are actively involved in the oversight of its Operational Risk framework;
      (b) it has, in accordance with the requirements set out in this Chapter, implemented and maintains an Operational Risk policy which provides for a sound and well-defined risk management framework to address the Authorised Person's Operational Risk; and
      (c) it has dedicated sufficient resources in the use of the relevant approach in its major business lines and its control and audit functions.

    • PRU 6.11.3

      An Authorised Person seeking to apply the Standardised Approach or the Alternative Standardised Approach must develop specific policies and have documented criteria for mapping gross income for current business lines and activities into the Standardised Approach or the Alternative Standardised Approach, as prescribed in App6. The criteria must be reviewed and adjusted for new or changing business activities as appropriate.

    • PRU 6.11.4

      Once an Authorised Person has obtained from the Regulator its written approval to apply the Standardised Approach or the Alternative Standardised Approach, the Authorised Person must not revert to the Basic Indicator Approach without prior written approval of the Regulator.

    • PRU 6.11.5

      (1) The Regulator may at any time by written notice require an Authorised Person to adopt a specified approach to calculating its Operational Risk Capital Requirement where the Regulator considers that this is:
      (a) appropriate given the nature, size, complexity and risk profile of the Authorised Person's business; or
      (b) necessary in the prevailing economic circumstances and it is in the interests of the ADGM.
      (2) An Authorised Person must comply with a requirement made under (1).