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CAPITAL CHANGE FOR OPERATIONAL RISK
What is the definition of operational risk under Basel II/III?
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events, including legal risk but excluding strategic and reputational risk.
What is the beta factor assigned to Corporate Finance under the Standardized Approach?
18% beta factor applies to Corporate Finance business line.
What are the three approaches prescribed under Basel II for calculating capital charge for operational risk?
The three approaches are the Basic Indicator Approach (BIA), the Standardized Approach (SA), and the Advanced Measurement Approach (AMA), in increasing order of risk sensitivity and sophistication.
What beta factor is assigned to Trading & Sales under the Standardized Approach?
18% beta factor applies to Trading & Sales business line.
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