Explanation

Under the Basel standardized approach for operational risk capital calculation, different business lines are assigned specific beta factors that reflect their relative operational risk levels. The beta factors represent the percentage of gross income that serves as the basis for operational risk capital requirements.

Based on Basel II/III standardized approach:

• Corporate finance typically has the highest beta factor (usually 18%)
• Retail banking usually has a lower beta factor (12%)
• Commercial banking typically has a beta factor of 15%
• Asset management typically has a beta factor of 12%
• Retail brokerage typically has a beta factor of 12%
• Payment and settlement typically has a beta factor of 18%

Note: Both corporate finance and payment/settlement typically have the highest beta factors at 18%. However, corporate finance is generally considered to have the highest operational risk exposure due to the nature of its activities involving large, complex transactions, advisory services, and capital markets activities that carry significant operational risks.

Therefore, corporate finance has the highest beta factor among the listed business units.