
EXPECTED
CAPITAL
ALLOCATION
HIGHER
LOWER
BASIC INDICATOR
COMPLEXITY
STANDARD APPROACH
INTERNAL MEASUREMENT APPROACH
LOSS DISTRIBUTION
SCOREBOARD
LOWER HIGHER
7 Five models by the Basel Committee
for computation of operational risk
7.1 Introduction
The five models advanced by the Basel Committee on Banking Supervision for
computation of operational risk charges are shown in Figure 7.1 on a double scale:
expected amount of capital allocation, and complexity. Top to bottom, they range
from the simplest, basic indicator approach, to the more sophisticated scoreboard. In
fact, there will be a family of scoreboard approaches, not just one of them. Practically
every financial ...