The Loss Distribution Approach (LDA) is a standard statistical technique used to model total operational risk losses. Under the LDA framework, a firm estimates two separate distributions: one for the frequency of loss events (how often losses occur) and one for the severity of loss events (how large the losses are). These two distributions are then combined to generate a total loss distribution, which is used to calculate the operational risk capital. While the AMA (Advanced Measurement Approach) is a regulatory framework that allows banks to use internal models, LDA is the specific mathematical and statistical method used to model the frequency and severity of these losses.