
OLD
MEAN
NEW
MEAN
NEEDED CAPITAL RESERVES FOR OPERATIONAL RISK
PROBABILITY
TRANSLATION TO THE LEFT
202 Operational Risk Control
translation to the left of the log normal distribution curve, shown in Figure 9.8. For
the time being, such translation to the left is only a hypothesis. Banks are hoping that
AMA solutions for operational risk and internal ratings-based (IRB) methods for
credit risk will reduce capital requirements. The keyword, until there is proof to the
contrary, is ‘hoping’.
9.7 A devil’s advocate in operational risk management
Effective operational risk control must have some brilliant people assigned to the
permanent doubting role of devil’ ...