According to the Basel II standards, every bank must calculate explicit capital charges to cover operational risk using one of three approaches: the basic indicator approach (BIA), the standardized approach (SA), and the advanced measurement approach (AMA). How many of the following statements are true with respect to these operational risk approaches? I: In practice the AMA is the most stringent approach for operational risk. II: The Basel Committee requires the implementation of the AMA involves four elements. III: Banks must not use internal data to estimate the loss frequency distribution in the implementation of the AMA. IV: Under the SA, operational risk capital is set equal to 15% of annual gross income over the previous three years.

atwo

bone

cfour

d) three