Answer: 99.9 percentile confidence level and a 1-year time horizon.

## Explanation Under the Basel Committee's proposals for the Advanced Measurement Approach (AMA) for operational risk capital calculation: - **Confidence Level**: 99.9% confidence level is required - **Time Horizon**: 1-year time horizon is used This means banks must hold enough capital to cover operational risk losses with 99.9% confidence over a one-year period. The 99.9% confidence level is significantly higher than the 99% level used in some other risk measures, reflecting the need for substantial capital buffers against operational risk events. **Key Points**: - 99.9% confidence level ensures banks can withstand extreme operational loss events - 1-year time horizon aligns with typical capital planning cycles - This requirement applies specifically to banks using the Advanced Measurement Approach - The high confidence level accounts for the tail risk in operational loss distributions

Author: LeetQuiz .