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AMA |
Scorecard Approach | Introduction
>In this method, an expert panel has to go
through a structured process of identifying the drivers for each risk category, and then
forming these into questions that could be put on scorecards.
>These questions are selected to cover
drivers of both the probability and impact of operational events, and the actions that
the bank has taken to mitigate them.
>In parallel with the scorecard development
and piloting, the bank’s total economic capital for operational risk is calculated
and then allocated to risk categories.
where R is some risk score that rescales
the initial capital charge K into the new one for a
given business line