BUISENESS MANAGEMENT
RISK MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Basic Indicator Approach
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Stressed Var method
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InternaL Ratings Method
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Score card method
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Detailed explanation-1: -The Basel framework provides three approaches for the measurement of the capital charge for operational risk. The simplest is the Basic Indicator Approach (BIA), by which the capital charge is calculated as a percentage (alpha) of Gross Income (GI), a proxy for operational risk exposure.
Detailed explanation-2: -According to the Basel Committee, there are three ways to measure operational risk: the basic indicator approach (BIA), the standard approach (SA) and the advanced measurement approach (AMA).
Detailed explanation-3: -Credit Risk component can be calculated in three different ways of varying degree of sophistication, namely Standardized Approach, Foundation Internal Rating-Based (IRB) Approach, and Advanced IRB Approach.