In the context of an interview for an operational risk analyst position at a prominent bank, the Chief Risk Officer (CRO) is evaluating the suitability of a prospective candidate. Which statement made by the candidate about the evaluation of operational risk would be considered correct?

Exam-Like

Economic capital of a bank should be sufficient to cover both the expected and the worst-case operational risk losses of the bank.

13.3%

Loss severity and loss frequency are often modeled with lognormal and Poisson distributions, respectively

55.2%

Operational loss data available from data vendors tend to be biased toward small losses but are particularly useful in determining loss frequency.

11.4%

The standardized approach used by banks in calculating operational risk capital requires the calculation of unexpected as well as expected losses.

20.0%

Financial Risk Manager Part 1