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.
GI x alpha = RWAs
£10m x 15% = £1.5m
The alpha is standardised across all business lines.
This weighting factor is also sometimes known as 'beta'.