Op Risk RWAs

Question 1

What risk do Operational Risk RWAs cover?

Answer 1

Capture the risk of loss from ineffective or failed processes, people, systems or external events that can disrupt the flow of business operational

Question 2

What are the methods of calculating Operational Risk? (3)

And which ones does Barclays use?

Answer 2

1) The Standardized Approach (TSA)

2) Basic Indicator Approach (BIA)

3) Advanced Measurement Approach (AMA)

Barclays use the standardized approach

Question 3

How does the Standardised approach work for calculating RWAs?

Answer 3

TSA takes:

• The last 3 years of actual income across assorted business lines
• Multiplied by the relevant beta factor for that line
• This is then risk weighted at 1250%