TITLE:
OPE25’s Sector Case Report—RWA Calculation for Operational Risk: Corporate Accounting FinTech Cash Surplus (Economic Capital Accounts and SOX Ratio)
AUTHORS:
John P. Koeplin, Pascal Lélé
KEYWORDS:
Loss Control, SOX Ratio, Incentivized Pay, FinTech SAF, Human Capital, Corporate Accounting, Historical Data, Economic Capital Accounts, Profitability Ratios
JOURNAL NAME:
Journal of Financial Risk Management,
Vol.12 No.2,
April
28,
2023
ABSTRACT: This article is the culmination of the research and
practical work of the network of academics and industries which has been set up
worldwide since 2013 to help banks and the credit risk counterparty business
sectors through action research and appropriate publications in Corporate
Accounting FinTech to cross the threshold of OPE25 effective January 1, 2023.
The OPE 25 standard—Calculation of RWA for operational risk indeed underpins
the accounting and financial management strategy of Banks and Counterparties
Credit Risk or CCR (insurance companies, industries, and services, including
local authorities). The forward management paradigm serving as the basis for
insuring bank credit and raising funds on the stock market has changed.
Forecasting future sales based on past sales data is no longer enough: To be
realistic, the mathematical or quantitative approach (statistics and
probabilities) for estimating the forecast turnover and future cash flows, in
particular the calculation of the growth rate, must now be linked to the use of
historical data (at least 5 years) and the future financial performance plan
(over at least 3 years), to the corporate accounting process taking into
account the total paid workforce, due to the predominant effect of HR, to
mitigate losses generating economic capital accounts and the SOX ratio
impacting both the cost price of products and services sold and the
competitiveness of the entity and securing investments. This is the requirement
of the “General criteria on loss data identification, collection and
treatment”, (BCBS, 2017a) which is
now incorporated into the Consolidated Basel III Framework, for OPE25,
https://www.bis.org/basel_framework/).