Skip to content

FRM Part II · FRM Exam Part II · High-level Summary of Basel III Reforms

Under the Basel III reforms finalised in 2017, which statement correctly describes the treatment of operational risk capital for internationally active banks?

The revised Basel framework replaces all earlier operational risk approaches, including the AMA, with a single non-model-based standardised approach. Banks no longer choose among methods or use internal models for Pillar 1 operational risk capital.

  1. ABanks may choose between the Basic Indicator, Standardised and Advanced Measurement Approaches according to their size
  2. BA single non-model-based standardised approach replaces all previous approaches, including the AMACorrect
  3. CThe AMA is retained only for banks with a Business Indicator above EUR 30 billion
  4. DOperational risk capital is determined solely by supervisors' Pillar 2 add-ons

Explanation

The Basel III reforms withdrew the Basic Indicator, Standardised and Advanced Measurement Approaches and replaced them with one standardised approach that is not based on internal models. The other options describe retained or invented features.

Did you get it right without looking?

One question tells you little. A timed set on High-level Summary of Basel III Reforms shows your real accuracy, how long you take and where you lose marks.

Practise High-level Summary of Basel III ReformsFree diagnostic mock

More High-level Summary of Basel III Reforms questions