Definition of Advanced measurement approach

Under this approach the banks are allowed to develop their own empirical model to quantify required capital for operational risk. Banks can use this approach only subject to approval from their local regulators.

Also, according to section 664 of original Basel Accord, In order to qualify for use of the AMA a bank must satisfy its supervisor that, at a minimum:

• Its board of directors and senior management, as appropriate, are actively involved in the oversight of the operational risk management framework;
• It has an operational risk management system that is conceptually sound and is implemented with integrity; and
• It has sufficient resources in the use of the approach in the major business lines as well as the control and audit areas.