In 2009 the Group has made significant progress in implementing the Advanced Model Approach (AMA) for Spain and Mexico. In December it presented a formal application for its approval to the Bank of Spain. This approval will represent recognition by the regulatory body of a management model that will enable the group to gradually reduce its regulatory capital. It is now nearly ten years since BBVA adopted a robust model for operational risk management based on four pillars:
- Risk identification: Consists in determining the factors that contribute to risk.
- Risk measurement: by establishing quantitative and qualitative metrics.
- Risk assessment: to establish a level of priority for each factor given its relative importance.
- Risk mitigation: this is the most important part of the management cycle. It consists of putting into practice a set of measures, such as improvements in controls or changes in processes, that reduce risk.
Operational risk management in BBVA is carried out by country. Each country has an Internal Control and Operational Risk (CIRO) unit in the Risk area. In turn, there is an internal control and operational risk unit in each business or support area that reports to the above mentioned CIRO. This gives the Group a view of risks at the macro level, as well as at the process level where mitigation decisions are taken.