New banking risk measurement method could revolutionize financial market stability.
The article compares different ways banks measure operational risk, like losses from mistakes or fraud. It looks at two methods called the basic indicator approach and the standardised approach. The researchers want to see which method is better for figuring out how much money banks need to set aside for operational risks. They found that the standardised approach, especially a variant called the alternative standardised approach, might be more accurate for measuring operational risk in banks.