16. According to the Basel Committee which of the options below is NOT a quantitative standard that a bank must meet before it is permitted to use the Advanced Measurement Approach (AMA) for operational risk capital:

A. A bank's risk measurement system should be sufficiently 'granular' to capture the major drivers of operational risk affecting the shape of the tail of the loss estimates

B. Supervisors will require the bank to calculate its regulatory capital as the Unexpected Loss (UL), disregarding the Expected Losses (EL)

C. Internally generated operational risk measures used for regulatory capital purposes must be based on a minimum 5-year observation period of loss data. When the bank first moves to the AMA a 3-year historical data window is acceptable.

D. The tracking of internal loss data

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'B' is not a quantitative standard. According to the Basel Committee, "Supervisors will require the bank to calculate its regulatory capital requirement as the sum of expected loss (EL) and unexpected loss (UL), unless the bank can demonstrate that it is adequately capturing EL in its internal business practices."