Methods of Operational Risk Management
Basel II and various Supervisory bodies of the countries have prescribed various soundness standards for Operational Risk Management for Banks and similar Financial Institutions. To complement these standards, Basel II has given guidance to 3 broad methods of Capital calculation for Operational Risk
- Basic Indicator Approach - based on annual revenue of the Financial Institution
- Standardized Approach - based on annual revenue of each of the broad business lines of the Financial Institution
- Advanced Measurement Approaches - based on the internally developed risk measurement framework of the bank adhering to the standards prescribed (methods include IMA, LDA, Scenario-based, Scorecard etc.)
The Operational Risk Management framework should include identification, measurement, monitoring, reporting, control and mitigation frameworks for Operational Risk.
Read more about this topic: Operational Risk
Famous quotes containing the words methods of, methods, risk and/or management:
“I believe in women; and in their right to their own best possibilities in every department of life. I believe that the methods of dress practiced among women are a marked hindrance to the realization of these possibilities, and should be scorned or persuaded out of society.”
—Elizabeth Stuart Phelps (1844–1911)
“The greatest part of our faults are more excusable than the methods that are commonly taken to conceal them.”
—François, Duc De La Rochefoucauld (1613–1680)
“I saw the man my friend ... wants pardoned, Thomas Flinton. He is a bright, good-looking fellow.... Of his innocence all are confident. The governor strikes me as a man seeking popularity, who lacks the independence and manhood to do right at the risk of losing popularity. Afraid of what will be said. He is prejudiced against the Irish and Democrats.”
—Rutherford Birchard Hayes (1822–1893)
“The Management Area of Cherokee
National Forest, interested in fish,
Has mapped Tellico and Bald Rivers
And North River, with the tributaries
Brookshire Branch and Sugar Cove Creed:
A fishy map for facile fishery....”
—Allen Tate (1899–1979)