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 qualifies for a loss-diversification capital discount because of its high loss volume.
- The supervisor will require the bank to adopt the Internal Ratings-Based approach for credit exposures.
- The bank's capital is floored at 0.541 to protect it against insolvency in a downturn.
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