The purpose of this paper prepared by the Risk Management Group of the Basel Committee is to further the Committee's dialogue with the industry on the development of a Pillar 1 capital charge for operational risk in the New Basel Capital Accord. Comments on the issues outlined in this paper would be welcome, and should be submitted to relevant national supervisory authorities and central banks and may also be sent to the Secretariat of the Basel Committee on Banking Supervision at the Bank for International Settlements, CH-4002 Basel, Switzerland, by 31 October 2001. Comments may be submitted via e-mail: BCBS.capital@bis.org1 or by fax: +41 61 280 9100. Comments on working papers will not be posted on the BIS website.