Explanation:
Operational risk economic capital is the difference between the loss at a given confidence level and the expected loss. In this case, $500,000 – $50,000 = $450,000.
(Book 4, Module 53.1, LO 53.b)
Ultimate access to all questions.
Question 78
An operational risk analyst simulates the distribution of operational losses for Green Bank. The analyst finds that the loss that corresponds to the 99th percentile of potential losses is $500,000 and the mean of the distribution is $50,000. His estimate of operational risk economic capital is closest to:
A
$50,000.
B
$450,000.
C
$495,000.
D
$500,000.
No comments yet.