BIA: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Add example.) |
imported>Doug Williamson (Expand.) |
||
| Line 13: | Line 13: | ||
£10m x 15% = £1.5m | £10m x 15% = £1.5m | ||
The alpha is standardised across all business lines. | |||
Revision as of 11:25, 29 October 2016
Bank supervision - capital adequacy - operational risk.
Basic Indicator Approach.
The Basic Indicator Approach is a method of evaluation of certain operational risks for banks, for capital adequacy calculation purposes.
Under the BIA, gross income (GI) is multiplied by a coefficient (alpha) to calculate the measure of risk weighted assets.
For example:
GI x alpha = RWAs
£10m x 15% = £1.5m
The alpha is standardised across all business lines.
