Under the Basel II framework, the Internal Models Approach (IMA) for market risk allows banks to develop and use their own internal Value at Risk (VaR) models to compute capital requirements. Since VaR measures aggregate risk and models consider the correlation structure across multiple risk factors and asset classes, IMA explicitly recognizes diversification benefits across the trading portfolio. In contrast, standard approaches for operational and credit risk generally apply fixed capital charges and correlations defined by regulators, effectively summing risks without granting explicit recognition of the portfolio's internal diversification benefits in the same dynamic manner.