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Unit-Linked Operational Risk Add-On

Calculate the Unit-Linked Operational Risk Add-On instantly.

€
%

Previous Twelve-Month Expenses for Life Contracts Where Policyholders Bear Investment Risk

€18 680 000

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Unit-Linked Expense Add-On Rate

25.0%

=

Unit-Linked Operational Risk Add-On

€4 670 000

Unit-Linked Operational Risk Add-On Impact

Shock charge
Retained value
ModuleShockPre-shockPost-shockCharge
Previous Twelve-Month Expenses for Life Contracts Where Policyholders Bear Investment Risk-25%€18 680 000€14 010 000€4 670 000
1Step 1

Unit-Linked Operational Risk Add-On

Unit-Linked Operational Risk Add-On=max⁡(0,Previous Twelve-Month Expenses for Life Contracts Where Policyholders Bear Investment Risk)×min⁡(100,max⁡(0,Unit-Linked Expense Add-On Rate))100\textit{Unit-Linked Operational Risk Add-On} = \max(0, \textit{Previous Twelve-Month Expenses for Life Contracts Where Policyholders Bear Investment Risk}) \times \frac{\min(100, \max(0, \textit{Unit-Linked Expense Add-On Rate}))}{100}

Understand the Unit-Linked Operational Risk Add-On

Overview

Article 204 applies a separate operational-risk amount equal to 25% of previous 12-month expenses for life contracts where policyholders bear investment risk.[1]

Input Terms

  • Previous 12-month expenses for life contracts where policyholders bear investment risk: Expenses incurred during the previous 12 months for life contracts where policyholders bear investment risk.[1]
  • Unit-Linked Expense Add-On Rate: Article 204(4) factor applied to previous 12-month expenses for life contracts where policyholders bear investment risk at the regulatory 25% value.[1]

Technical Rationale

Article 204 gives unit-linked expenses a separate operational-risk add-on because policyholders bear the investment risk, but the undertaking still carries administration, processing, and platform-control risk for that business.[1] The expense basis is therefore a practical proxy for operational scale where premium and provision measures would understate the retained process risk.

Keeping the unit-linked expense basis separate prevents the Article 204 expense amount from being blended into the non-unit-linked premium and provision bases.

Important Notes

  • Evidence boundary: The Unit-Linked Operational Risk Add-On is the separate unit-linked expense component of operational-risk evidence.
  • No BSCR cap here: The 30% BSCR cap belongs to the final Article 204 operational-risk amount.

Sources

  1. Delegated Regulation (EU) 2015/35 - Art. 204 (Operational risk) - EIOPA

Default values are illustrative sample inputs for navigation, training, and QA. Replace them with controlled data before using the result in capital analysis, governance, or reporting decisions.