MANAGEMENT

Detailed explanation-1: -Unexpected loss (UL = economic capital)The use of economic capital is a measure for the unexpected loss (= volatility of EL), which is consequently not included in the profit/loss calculation in the course of budgetary planning.

Detailed explanation-2: -The expected loss is the amount a bank anticipates to lose, on average, over a predetermined period when extending credits to its customers. Unexpected loss is the volatility of credit losses around its expected loss.

Detailed explanation-3: -An unexpected loss in data can result from fires, earthquakes, floods, or any sort of natural disaster. Illegal gamblers will at times pay sports players to lose so that they may profit from the otherwise unexpected loss.

Detailed explanation-4: -Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.

Detailed explanation-5: -It refers to property being damaged or destroyed and then the business must stop operations until the property is repaired or replaced and normal operations resume. The amount of the loss is not always dependent on the value of damaged property. Rather, it is related to the impact the loss has on regular operations.