Discuss PRMIA 8010 Exam Topic 3 Question 87

According to the implied capital model, operational risk capital is estimated as:

AOperational risk capital held by similar firms, appropriately scaled

BTotal capital less market risk capital less credit risk capital

CCapital implied from known risk premiums and the firm's earnings

DTotal capital based on the capital asset pricing model

Suggested Answer: B

Operational risk capital estimated using the implied capital model is merely the capital that is not attributable to market or credit risk. Therefore Choice 'b' is the correct answer. All other responses are incorrect.

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17 comments · newest first

Hubert 20 days ago

I guess it depends on how you view operational risk.

Staci 25 days ago

True, but B is more comprehensive in capital assessment.

Crista 1 month ago

But A gives a real-world comparison, which is valuable.

Leonard 1 month ago

A is too vague for me. I prefer a more precise method.

Lashonda 1 month ago

I feel B covers the overall capital better.

Hubert 2 months ago

C seems logical too. Known risk premiums are important.

Crista 2 months ago

I lean towards A. Using similar firms is a solid approach.

Staci 2 months ago

I think B is the best choice. It makes sense to subtract market and credit risk.

Roosevelt 2 months ago

A is a solid choice too, especially for similar firms!

Adolph 2 months ago

C sounds interesting, but is it really reliable?

Felton 2 months ago

Wait, how can we just subtract market and credit risk? Seems too simple.

Curtis 3 months ago

Totally agree with B, it covers all bases!

Almeta 3 months ago

I think it's B, that makes the most sense.

Delsie 3 months ago

I don't think it's D because the capital asset pricing model is more about expected returns, not directly about operational risk capital.

Teri 3 months ago

I'm a bit confused because I feel like option C could also be correct since it mentions known risk premiums, but I can't recall the details clearly.

Rolland 3 months ago

I remember practicing a question similar to this, and I think it was about calculating total capital after subtracting market and credit risks, which might point to option B.

Tawanna 3 months ago

I think the implied capital model focuses on how much capital firms need for operational risk, but I'm not sure if it's option A or B.

PRMIA 8010 Exam - Topic 3 Question 87 Discussion