Why choose the AMA (Advanced Measurement Approach) instead of the BIA (Basic Indicator Approach) or SMA (Standardised Measurement Approach) ?
Let's see the benefits!
Reduction of Capital requirement
It enables the definition of a capital requirement that matches the institution's risk profile more precisely, which, according to implementation experience, enables a capital requirement reduction of around 10-20 percent.
Higher profitability
As a result of a more precise identification of risks, a more risk-aware, transparent institutional environment is created, which leads to lower potential losses and thus higher profitability by establishing appropriate controls.
Risk-based performance measurement
The capital requirement can be allocated to individual business branches (or it is also a legal requirement), thus enabling risk-based performance measurement.
With a parent bank or independently?
If the foreign parent bank applies the AMA methodology, the domestic bank also calculates and allocates the capital requirement based on the model applied at group level.
Many big domestic banks (without foreign parent banks) also aim to introduce AMA.
The preparation for the AMA method was successfully carried out by the ITCB (Bankárképző) for many clients, and our joint projects with our clients were followed by supervisory approval.
Tasks of the project introducing the AMA method:
Examination of the Bank's compliance and elimination of deficiencies against the supervisory requirements of the AMA methodology. During the GAP analysis, we reveal the Bank's potential shortcomings and make recommendations to ensure AMA compliance.
Tasks:
Collection of loss data
Key Risk Indicators (KRI)
Risk Self-Assessments (RCSA)
Scenario analysis
Use test
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