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An operational risk manager at a bank is preparing for the bank's adoption of the standardized measurement approach (SMA) for calculating operational risk capital according to Basel guidelines. The manager focuses on the formulation of the business indicator component and the loss component. Which of the following statements is correct regarding these two components of the SMA?
A
The loss component is calculated as the 99.9 percentile of the 1-year loss for each business unit and risk type.
B
The business indicator component is calculated in the same manner under the SMA as it is under the advanced measurement approach.
C
Any trading losses suffered by the bank will increase the business indicator component, despite decreasing gross income.
D
The SMA is structured in such a way that for an average bank, the loss component is greater than the business indicator component.