Answer: The calculations will need to be broken down by the operational risk types defined by the Basel Committee.

## Explanation When a bank transitions from the Basic Indicator Approach (BIA) to the Standardized Approach (TSA) under Basel II for operational risk capital calculation, the key change is: **Option A is correct** - Under the Standardized Approach, the bank must break down its operations into business lines defined by the Basel Committee and calculate operational risk capital separately for each business line. The Basel Committee defines eight business lines for this purpose: - Corporate finance - Trading and sales - Retail banking - Commercial banking - Payment and settlement - Agency services - Asset management - Retail brokerage **Option B is incomplete** - The text cuts off, but it appears to be referring to the Advanced Measurement Approach (AMA), not the Standardized Approach. AMA uses internal models based on loss distributions, while the Standardized Approach still uses a percentage of gross income but allocated across business lines. **Key differences between BIA and TSA:** - **BIA**: Uses 15% of average annual gross income over previous three years - **TSA**: Uses different percentages (12-18%) of gross income allocated to specific business lines - **TSA requires**: Business line mapping and separate calculations for each line This transition represents a more sophisticated and granular approach to operational risk capital calculation.

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