Explanation:
In the Basel standardized approach for operational risk, different business lines are assigned different beta factors that reflect their relative operational risk exposure. Based on the Basel framework:
Typical beta factors by business line:
The business units with the highest beta factors (18%) are typically:
Among the options provided, Corporate finance has the highest beta factor of 18%, while retail banking, asset management, and retail brokerage all have lower beta factors of 12%.
Correct Answer: A (Corporate finance)
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The standardized approach for calculating operational risk capital requirements uses beta factors for a given business line and annual gross income for business lines over a 3-year period. Which of the following business units has the highest beta factor?
A
Corporate finance
B
Retail banking
C
Asset management
D
Retail brokerage
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