Basic indicator approach

Bank supervision - capital adequacy - operational risk.

(BIA).

The Basic Indicator Approach is a method of evaluation of certain operational risks for banks, for capital adequacy calculation purposes.

Under the BIA, gross income (GI) is multiplied by a coefficient (alpha) to calculate the measure of risk weighted assets.

For example:

GI x alpha = RWAs

£10m x 15% = £1.5m

The alpha is standardised across all business lines.

This weighting factor is also sometimes known as 'beta'.

See also

• Alpha
• AMA
• ASA
• Bank supervision
• Capital adequacy
• Internal Models Approach
• Operational risk
• Risk Weighted Assets
• Standardised Approach (SA or TSA)