Discuss PRMIA 8020 Exam Topic 4 Question 27

Under the previous Basel II approach, which was not an approach for operational risk?

ABasic Indicator Approach (BIA).

BThe Standardized Approach (TSA).

CAdvanced Measurement Approach (AMA).

DAlternative Measurement Approach (AMA).

Suggested Answer: D

Overview of Basel II Approaches for Operational Risk

Basel II introduced three main approaches to calculating capital requirements for operational risk:

Basic Indicator Approach (BIA)

The Standardized Approach (TSA)

Advanced Measurement Approach (AMA)

Why Answer D is Correct

Alternative Measurement Approach (AMA) is not a recognized Basel II approach.

The correct term under Basel II was Advanced Measurement Approach (AMA).

Why Other Answers Are Incorrect

Option

Explanation

A . Basic Indicator Approach (BIA).

Correct -- A simple approach where capital is set as a fixed percentage of gross income.

B . The Standardized Approach (TSA).

Correct -- Categorizes operational risk into business lines, each with assigned risk factors.

C . Advanced Measurement Approach (AMA).

Correct -- Uses internal models to calculate capital requirements based on loss data, scenario analysis, and risk controls.

PRMIA Reference for Verification

Basel II Framework for Operational Risk (2004)

PRMIA Risk Management Guidelines

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21 comments · newest first

Shawna 30 days ago

Same here! It’s all about knowing the basics.

Catalina 1 month ago

I remember studying this. D was never mentioned.

Rodolfo 1 month ago

Totally! They want to confuse us.

Gerald 2 months ago

D is just a trick option, right?

Shawna 2 months ago

Exactly! AMA is also valid, but not D.

Catalina 2 months ago

I feel confident about BIA and TSA being valid.

Rodolfo 2 months ago

Yeah, I agree. It’s not a recognized method.

Gerald 2 months ago

I think the answer is D. Alternative Measurement Approach.

Jenise 2 months ago

Exactly! D is definitely not part of Basel II. Good luck everyone!

Scot 3 months ago

I feel confident about this question. BIA, TSA, and AMA are the main ones.

Laticia 3 months ago

Agreed! D sounds unfamiliar. BIA, TSA, and AMA are well-known.

Ardella 3 months ago

I think D is the right answer. Never heard of Alternative Measurement Approach.

Tashia 3 months ago

BIA, TSA, and AMA are the only ones that count.

Josefa 3 months ago

I thought there was an Alternative Measurement Approach too!

Tarra 3 months ago

Wait, isn't AMA actually a valid approach?

Stephane 4 months ago

Totally agree, it's definitely B.

Cammy 4 months ago

D) Alternative Measurement Approach (AMA) isn't a real thing.

Iesha 4 months ago

I’m pretty confident that D) Alternative Measurement Approach isn’t correct, but I can't remember the specifics of why. I should have reviewed that section more thoroughly!

Paulina 4 months ago

I practiced a similar question last week, and I think the Advanced Measurement Approach is the one that was actually used. The other options seem more familiar to me.

Diane 4 months ago

I think the Basic Indicator Approach and Standardized Approach were definitely part of Basel II, but I can't recall if there was an Alternative Measurement Approach. It sounds off.

Lavonda 4 months ago

I remember studying the Basel II framework, but I’m not entirely sure about the Alternative Measurement Approach. Was that even a real term used in the context of operational risk?

PRMIA 8020 Exam - Topic 4 Question 27 Discussion