Five reasons why regulators should approve the loss-distribution approach

Global banking regulators have effectively turned down the one approach to calculating an operational risk capital charge that would fulfil their aim of making the charge truly risk-sensitive.

They should change their minds and ensure that the method - the loss distribution approach (LDA) - is an option in the new capital adequacy accord they intend introducing for international banks.

With LDA a bank specifies its own operational loss distributions, business lines and risk types for

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