medium · Frm Part 2 Operational Risk
A bank has a BIC of 100 million Euro and an LC of 500 million Euro.
What does the resulting ILM suggest about the supervisor's view of the bank's risk profile?
- The bank is penalized for a loss history that is significantly worse than its size suggests.
- The bank is eligible for a 'diversification discount' because of high loss volume.
- The supervisor will mandate a switch to the Internal Ratings Based (IRB) approach.
- The bank's capital is floored at 0.541 to protect against insolvency.
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