medium · Frm Part 2 Operational Risk
Under the current Basel Standardized Measurement Approach (SMA) for operational risk, which factor is the sole driver of the 'Internal Loss Multiplier' (ILM)?
- The number of high-severity internal control failures identified in the 'Three Lines of Defense' audit.
- The ratio of average annual historical losses over 10 years to the Business Indicator Component.
- The 99.9% quantile of a simulated Monte Carlo loss distribution.
- A fixed multiplier based on the bank's status as a G-SIB (Global Systemically Important Bank).
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