A change of scene
Scenario analysis
Scenario analysis used to be a divisive issue. Advanced measurement approach (AMA) applicants under the Basel II accord fell more or less neatly into one of two camps: those using loss data to model operational risk, and those using scenarios. Each camp championed its own approach and cast brickbats at the other: on the one hand, loss data was incomplete or irrelevant; on the other, scenarios were an overly subjective short-cut.
Today, life is a little more harmonious, says Valerie Belhassen
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