Standardized approach

Standardized approach

According to International Convergence of Capital Measurement and Capital Standards, known as Basel II, the standardized approach is a set of risk measurement techniques for banking institutions. The term may be used in the context of credit risk or operational risk.

Standardized approach for credit risk

The Basel Accord proposes to permit banks a choice between two broad methodologies for calculating their capital requirements for credit risk. One alternative is to measure credit risk in a standardised manner, supported by external credit assessments. The other alternative is based on internal ratings.

The approach supported by external credit assessment is known as standardized approach (credit risk).

Standardized approach for operational risk

In the standardised approach (operational risk), banks’ activities are divided into eight business lines: corporate finance, trading & sales, retail banking, commercial banking, payment & settlement, agency services, asset management, and retail brokerage. Capital for operational risk for each of these lines is a percentage of the bank's gross income from that particular line of business.

ee also

*Foundation IRB
*Advanced IRB
*Basic approach
*Advanced measurement approach
*Basel II
*Basel Accord

References

*http://www.bis.org/publ/bcbsca.htm Basel II: Revised international capital framework (BCBS)
*http://www.bis.org/publ/bcbs107.htm Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework (BCBS)
*http://www.bis.org/publ/bcbs118.htm Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework (BCBS) (November 2005 Revision)
*http://www.bis.org/publ/bcbs128.pdf Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework, Comprehensive Version (BCBS) (June 2006 Revision)


Wikimedia Foundation. 2010.

Поможем написать курсовую

Look at other dictionaries:

  • Standardized Approach — One of three methods for quantifying capital required for operational risk under proposed Basel II capital rules. Banks using the Standardized Approach must hold capital for operational risk based the gross income for each of eight separate,… …   Financial and business terms

  • Standardized approach (operational risk) — In the context of operational risk, the standardized approach or standardised approach is a set of operational risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions.Basel II requires all banking… …   Wikipedia

  • Standardized approach (credit risk) — The term standardized approach (or standardised approach) refers to a set of credit risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions.Under this approach the banks are required to use ratings from …   Wikipedia

  • Standardized test — Young adults in Poland sit for their Matura exams. The Matura is standardized so that universities can easily compare results from students across the entire country. A standardized test is a test that is administered and scored in a consistent,… …   Wikipedia

  • Standardized Testing and Reporting — The Standardized Testing and Reporting (STAR) Program measures performance on the California Achievement Test, Sixth Edition Survey (CAT/6 Survey), the California Content Standards Test and the Spanish Assessment of Basic Education (SABE/2). The… …   Wikipedia

  • Basic indicator approach — The basic approach or basic indicator approach is a set of operational risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions.Basel II requires all banking institutions to set aside capital for… …   Wikipedia

  • Advanced measurement approach — The advanced measurement approach (AMA) is a set of operational risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions.Under this approach the banks are allowed to develop their own empirical model to… …   Wikipedia

  • basic indicator approach — One of three methods for quantifying capital required for operational risk under proposed Basel II capital rules. Banks using the basic indicator approach must hold capital for operational risk equal to the average over the previous three years… …   Financial and business terms

  • Instrument approach — Terminal procedures for an ILS approach in the United States. (The disclaimers shown in red in the illustration do not appear on the original approach plate.) For aircraft operating under instrument flight rules (IFR), an instrument approach or… …   Wikipedia

  • German income approach — The German income approach (German: Ertragswertverfahren, abbr. EWV) is the standard approach used in Germany for the valuing of property that produces a stream of future cash flows. For general information on German real estate appraisal please… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”