The Basic Indicator Approach
The measurement of operational risk is not as easy as credit and market risk. Therefore, the Basel Committee on Banking Supervision has developed a new regulatory capital approach for operational risk measurement and introduced three approaches: the Basic Indicator Approach (BIA), the Standardized Approach (SA) and the Advanced Measurement Approach (AMA) (Rajeev, 2004). Basic Indicator Approach (BIA) In this approach, the bank is required to measure the average annual gross income over the previous three years. This average, multiplied by a factor of 15 percent as set by the Committee, gives the capital requirements. The charge may be calculated as follows: KBIA = AAGI x KBIA = The capital charge under the Basic Indicator Approach …show more content…
The qualitative criteria include independent operational risk management function, active involvement of board of directors and senior management in the oversight of the operational risk management framework, regular reporting of operational risk exposure and loss experience and documentation of risk management system. The quantitative criteria may include the demonstrated ability of the bank to capture the severe loss events and sufficient granularity in risk measurement systems to capture the major drivers of operational risk. Under this method, banks ' own internal assessments of operational risk will be verified and accepted for supervisory …show more content…
A bank will be permitted to use the Advanced Management Approach for some parts of its operations and the Basic Indicator Approach or the Standardized Approach for the balance, provided that (i) the AMA on its implementation have covered a significant part of the bank’s operational risk, (ii) all of the bank’s operations that are covered by the AMA, meet the qualitative criteria for using AMA, while those parts of its operations that are using one of the simpler approaches meet the qualifying criteria for that approach, (iii) the bank provides its supervisor with a plan specifying the timetable to which it intends to roll out the AMA across all material legal entities and business lines. The plan should be driven by the practicality and feasibility of moving to the AMA over time and not for other reasons (Shastri,
Financial Analysis Of Macy's
1606 Words | 7 PagesThe three companies chosen are: 1. MACYS 2. KOHLS and 3. DILLARDS Macys is registered as Macy’s, was incorporated in the state of Delaware, fiscal year-end is 02/3/2018, with its stocks listed on the New York Stock exchange (NYSE) www.sec.gov/edgar.shtml.
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Jagdambay Exports Case Study
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4.5: Economic Order Quantity (EOQ)
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Target Risk Management Case Study
908 Words | 4 PagesThe risk management process establishes the methodology for risk enterprises framework for the of many businesses (Fraser & Simkins, 2010). A retail business such as Target needs to do a risk assessment to establish the types of risks being faced by the organization. The risk assessment process starts with the identification and categorization of risk factors. High customer interaction of the retail businesses like Target, need to identify risk as a continuous basis effort over the lifetime of the business (Mandru, 2016). It important that the business leaders, set goals and priorities for the risk management system.
Advantages And Disadvantages Of Plant-Wide Allocation Methods
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Marriott Corporation Case Study
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Lehman Brothers Red Flags Case Study
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Tesco Accounting Report
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Harry Davis Case Study
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