The final report presents modifications to the operational risk reporting framework under the CRR3 regulation, replacing several approaches with a single non-model-based method called the business indicator component (BIC) approach. This document aims to assess compliance with own funds requirements for operational risk and provide further details on the calculation of business indicator components. The publication…
This document is the final report of the European Banking Authority (EBA) published in June 2025, entitled "Final report on draft ITS Supervisory reporting for operational risk (CRR3 - phase 1)". It concerns the amended Implementing Technical Standards (ITS) related to prudential reporting on operational risk, pursuant to Article 430(7) of Regulation (EU) No 575/2013 (CRR3). The scope covers the reporting requirements of European financial institutions on operational risk, linked to the new CRR3 regulatory framework, applicable from 2025, and includes the calculation methods for capital requirements related to the Business Indicator Component (BIC). The document comprises 34 pages and details the changes to reporting templates, instructions, impact analyses, as well as responses to public consultations.
The EBA final report addresses the implementation of new prudential reporting requirements related to operational risk under the CRR3 framework, which replaces existing multiple approaches with a unique non-modelled method based on the Business Indicator Component (BIC). This evolution requires the removal of the old operational risk template and the creation of a comprehensive reporting framework for the BIC to ensure compliance with capital requirements. The report presents amendments to the Implementing Technical Standards (ITS) for reporting, which complement existing requirements by requesting additional details on the calculation of BIC components. The EBA ensured alignment of the ITS with other Level 2 regulatory products, thus guaranteeing a harmonized approach and clarity of supervisory expectations. The selection of data to be reported was rigorously limited to essential information to reduce compliance burden. An implementation schedule foresees the publication of the data model, XBRL taxonomy, and validation rules in Q3 2025, with a first reporting date set for March 2026. The report also highlights the importance of a transitional period for data quality, notably for historical information and merger and acquisition adjustments. In conclusion, the proposed framework aims to balance regulatory efficiency, proportionality, and the quality of data necessary for supervisory authorities to perform their tasks.
The document responds to the publication of the CRR3/CRD VI banking regulatory package in June 2024, which transposes the post-crisis Basel III reforms into European law, with a focus on operational risk. CRR3 introduces a new unique method for calculating capital requirements for operational risk, based on the Business Indicator Component (BIC), replacing previous multiple approaches. This regulatory evolution requires a complete revision of the prudential reporting framework to ensure compliance and effective supervision of financial institutions. The EBA is mandated by Article 430(7) of the CRR to develop uniform Implementing Technical Standards (ITS) defining formats, frequencies, instructions, and reporting methodologies. The report aims to adapt existing templates and instructions to this new framework, while ensuring harmonization with other Level 2 regulatory products. Challenges include simplification, proportionality, reduction of burden for institutions, and ensuring availability of essential data for prudential supervision. The scope covers institutions subject to COREP reporting, with particular attention to merger and acquisition adjustments and accounting specificities (IFRS vs NGAAP).
- New regulatory framework for operational risk: CRR3 introduces a unique non-modelled method, the Business Indicator Component (BIC), for calculating capital requirements related to operational risk, replacing previous multiple approaches (p. 3, 5, 7).
- Operational reporting and templates: Reporting now includes four main templates: C 16.01 (existing, capital requirements reporting), C 16.02 (details of BIC sub-components), C 16.03 (breakdown of losses, expenses, provisions related to operational risk events), and C 16.04 (information on subsidiaries benefiting from a specific derogation) (p. 10-13).
- Alignment with FINREP: COREP operational reporting is aligned with FINREP accounting data, covering IFRS and national standards (NGAAP), to ensure consistency and reduce implementation costs, although differences remain notably on merger and acquisition adjustments and reporting thresholds (p. 13-14).
- Simplification and proportionality: The EBA reduced the granularity of requested information, notably on expenses related to leased assets, and introduced transitional provisions to allow the use of estimates or proxies for certain data during the first reporting quarters (March to September 2026), acknowledging data quality difficulties (p. 8-10).
- Instructions and IT solutions: Detailed instructions are binding and available on the EBA website. The EBA also develops compliance support tools, such as mapping between reporting and disclosure requirements, and an interactive tool to identify reporting obligations (p. 5-6).
- Coordination with other regulatory products: The ITS publication schedule is synchronized with other technical standards and guidelines on operational risk, notably those defining BIC components and exclusions, to ensure a harmonized approach (p. 6-7).
- Impact analysis: The report includes a qualitative analysis of costs and benefits, concluding that benefits for supervision justify additional costs for institutions, these being largely related to underlying regulatory changes (p. 18-20).
- Public consultation and feedback: The EBA conducted a public consultation in February-April 2024, receiving 11 responses. Main feedback concerned data granularity, merger and acquisition management, alignment with FINREP, implementation burden, and tight schedule. The EBA adjusted templates and instructions accordingly, notably clarifying reporting modalities, introducing transitional periods, and specifying accounting data treatment (p. 26-34).
- Established facts: CRR3 replaces multiple approaches with a unique BIC method for operational risk, requiring an adapted reporting framework. Four COREP templates are defined to cover capital requirements, breakdown of BIC components, distribution of financial impacts related to operational risk events, and information on derogatory subsidiaries (p. 3, 10-13).
- Assumptions: Data quality for BIC reporting will reach a satisfactory level from December 2026, after a transitional period where estimates are accepted. Alignment with FINREP is possible but requires adjustments and approximations, notably for historical data and mergers and acquisitions (p. 9-10, 13-14).
- Interpretations: The reduction in data granularity requested, notably on expenses related to leased assets, aims to limit compliance burden while retaining essential information. The EBA considers that detailed reporting of operational losses and expenses improves supervisory capacity (p. 8-9, 19).
- Uncertainties: Technical and organizational difficulties for institutions to collect and report detailed data, notably for prior periods, remain a challenge. The need to use proxies or estimates during the initial phase introduces uncertainty on data quality (p. 9-10, 27-28).
- Consultation outcome: Feedback led to template adjustments, clarifications of instructions, introduction of transitional periods, and maintenance of reporting obligations for all institutions, regardless of size (p. 26-34).
The EBA concludes that adapting the Implementing Technical Standards (ITS) for operational risk reporting under CRR3 is necessary to ensure compliance with the new regulatory framework and enable effective supervision. The amended ITS introduce new detailed templates, aligned with other Level 2 regulatory products, and take into account stakeholder feedback to reduce reporting burden and clarify expectations. A transitional period is planned to allow institutions to improve the quality of reported data. The EBA recommends rapid adoption of these ITS by the European Commission, with entry into force shortly after publication, and the provision of technical tools (data model, XBRL taxonomy, validation rules) during the second half of 2025. The first reporting date is set for March 2026. These measures aim to ensure a balance between the need for precise information for supervision and proportionality of the burden imposed on institutions.
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