Regulators move to impose AMA capital floors
Regulators continue to push large institutions towards the advanced approach for operational risk management – but imposing capital floors might not be the best way to accomplish their aims
The advanced measurement approach to operational risk management was devised to ensure a firm’s op risk capital reflects the true nature of the risks it is carrying. Both the standardised (TSA) and basic indicator (BIA) approaches simply apply an indicator to gross income that is a proxy for the bank’s op risk exposure. However, in this new environment of more intense regulatory scrutiny and the
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