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COLLECTION OF INTERNAL LOSS DATA AND EXTERNAL LOSS DATA
What is internal loss data in the context of operational risk management?
Internal loss data refers to records of actual operational loss events that have occurred within a bank, including the loss amounts, event types, business lines affected, and dates. It forms the primary input for quantifying operational risk under the Advanced Measurement Approach (AMA).
What is the primary purpose of collecting internal loss data in banks?
To identify, measure, and manage operational risk exposures effectively.
What minimum threshold does the Basel II framework prescribe for collecting internal loss data?
Basel II prescribes a minimum gross loss threshold of EUR 10,000 for collecting internal loss data for AMA purposes, though national supervisors may set a lower threshold. Banks must collect data on all loss events above this threshold.
What does 'loss severity' mean in operational risk loss data collection?
The monetary amount of financial loss from a single operational risk event.
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