Economic Capital usage for Operational Risks

Economic Capital Usage for Operational Risk by Business Division

 

 

2014 increase (decrease) from 20131

in € m.

Dec 31, 2014

Dec 31, 2013

in € m.

in %

1

Amounts allocated to the business segments have been restated to reflect comparatives according to the structure as of December 31, 2014.

Corporate Banking & Securities

3,569

2,453

1,116

45

Private & Business Clients

1,088

803

285

35

Global Transaction Banking

150

96

54

56

Deutsche Asset & Wealth Management

722

580

142

24

Non-Core Operations Unit

2,070

1,320

750

57

Total economic capital usage for operational risk

7,598

5,253

2,345

45

The economic capital usage for operational risk as of December 31, 2014 was € 7.6 billion, € 2.3 billion or 45 % higher compared to year-end 2013. The increase was mainly driven by an early recognition of the impact of model enhancements to our Advanced Measurement Approach (AMA) model that were implemented in the second quarter and which initially led to additional economic capital of € 1.1 billion. These model enhancements led to a reflection of the operational risk losses that have materialized and which are largely due to outflows related to litigation, investigations and enforcement actions. The increase in economic capital is spread across all business divisions.

The economic capital continues to include the safety margin applied in our AMA model. It was implemented in 2011 to cover unforeseen legal risks from the recent financial crisis. The model enhancements mentioned above are intended to replace the safety margin by a more risk sensitive measure. Therefore the impact of the model change above the safety margin is recognized in the economic capital. This will result in higher economic capital even after we remove the safety margin.


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