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Under Basel Rules, the Basic Indicator Approach is a regulatory framework for? A. liquidity risk B....

Under Basel Rules, the Basic Indicator Approach is a regulatory framework for?

A. liquidity risk
B. business risk
C. operational risk
D. funding risk

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Answer #1

✓ Answer D) Operational risk

The basic indicator approach is a regulatory framework for Operational risk. The basic indicator approach is a set of operational risk measurement techniques. This approach helps to calculate operational risk capital under the Basel II accord, and for that it uses the bank's gross income as a risk indicator for the bank's operational risk exposure.

The basic indicator approach is not a regulatory framework for liquidity risk, business risk and funding risk.

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