Prudential Regulation Authority Rulebook

5.1

A firm’s capital requirement for operational risk must:

1. (1) reflect its operational risks to the extent that they are not already reflected in the risk modules used to calculate its basic SCR; and
2. (2) be calibrated in accordance with Solvency Capital Requirement – General Provisions 3.3 to 3.4.

[Note: Art. 107(1) of the Solvency II Directive]

5.2

With respect to linked long-term contracts of insurance, the calculation of the capital requirement for operational risk must take into account the amount of annual expenses incurred in respect of those insurance obligations.

[Note: Art. 107(2) of the Solvency II Directive]

5.3

With respect to insurance business operations other than those referred to in 5.2, the capital requirement for operational risk must:

1. (1) take into account the volume of those operations, in terms of earned premiums and technical provisions which are held in respect of that insurance business; and
2. (2) not exceed 30% of the basic SCR relating to those operations.

[Note: Art. 107(3) of the Solvency II Directive]