Setting the scene

Scenario analysis used to be a divisive issue. Advanced measurement approach (AMA) applicants 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: loss data was incomplete or irrelevant; scenarios were an overly subjective short-cut. Today, life is a little more harmonious, says Valerie Belhassen, global head of operational risk at BNP Paribas in Paris.