Financial Institution Letter

Advanced Measurement Approach: Supervisory Guidance


June 3, 2011

Summary: The FDIC, with the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, is issuing guidance to clarify supervisory expectations and to highlight key considerations to implement an effective advanced measurement approach (AMA) framework. The guidance focuses on the combination and use of the four required AMA data elements: internal operational loss event data, external operational loss event data, business environment and internal control factors (BEICFs), and scenario analysis. Given some of the unique challenges with scenario analysis as it relates to the AMA, this data element is discussed in greater detail. Governance and validation also are discussed given their importance in ensuring the integrity of a bank’s AMA framework.

Statement of applicability to institutions with total assets less than $ 1 billion: Not applicable.

Suggested Distribution:

FDIC-Supervised Banks (Commercial and Savings)

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