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PRMIA 8010 Exam - Topic 3 Question 87 Discussion

According to the implied capital model, operational risk capital is estimated as:
B) Total capital less market risk capital less credit risk capital
A) Operational risk capital held by similar firms, appropriately scaled
C) Capital implied from known risk premiums and the firm's earnings
D) Total capital based on the capital asset pricing model

PRMIA 8010 Exam - Topic 3 Question 87 Discussion

Actual exam question for PRMIA's 8010 exam
Question #: 87
Topic #: 3
[All 8010 Questions]

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

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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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Teri
2 days 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.
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Rolland
7 days 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.
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Tawanna
12 days 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.
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