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PRMIA 8020 Exam - Topic 7 Question 19 Discussion

Actual exam question for PRMIA's 8020 exam
Question #: 19
Topic #: 7
[All 8020 Questions]

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

Show Suggested Answer Hide Answer
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


by Lashonda at Jan 05, 2026, 05:16 AM

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Colene
3 days ago
Haha, D) Alternative Measurement Approach (AMA)? What is this, a new approach they're testing on us?
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Tamesha
8 days ago
I'm pretty sure B) The Standardized Approach (TSA) is the way to go. Who needs all that advanced stuff anyway?
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Krystal
14 days ago
C) Advanced Measurement Approach (AMA) is the correct answer. The other options are actual approaches used in Basel II.
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Dorthy
19 days ago
D) Alternative Measurement Approach (AMA) is not a real approach under Basel II. That's a trick question!
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Willetta
24 days ago
I’m pretty sure the AMA stands for Advanced Measurement Approach, but I’m confused about the Alternative Measurement Approach. Did we cover that in class?
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Glory
29 days ago
I practiced a similar question last week, and I feel like the Advanced Measurement Approach was the most complex one. I just can't remember if the Alternative Measurement Approach was ever mentioned.
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Lettie
1 month 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.
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Emeline
1 month ago
I remember studying the different approaches for operational risk, but I'm not sure about the Alternative Measurement Approach. Was that even a real term in Basel II?
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Carmela
1 month ago
I feel pretty confident about this one. The Basel II framework had the BIA, TSA, and AMA as the main approaches for operational risk, so D, the "Alternative Measurement Approach," must be the one that was not part of that framework.
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Gaynell
2 months ago
Okay, let me think this through. The Basel II framework had approaches for measuring operational risk, and I know the AMA was one of the more advanced methods. So I'm going to go with D as the approach that was not part of Basel II.
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Louvenia
2 months ago
Hmm, I'm a bit confused here. I know there was the Basic Indicator Approach and the Standardized Approach, but I can't remember if the Advanced Measurement Approach was part of Basel II or not.
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Marsha
2 months ago
I'm pretty sure the previous Basel II approach didn't have an "Alternative Measurement Approach" for operational risk, so I'll eliminate D.
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