<Li> It has an operational risk management system that is conceptually sound and is implemented with integrity; and </Li> <Li> It has sufficient resources in the use of the approach in the major business lines as well as the control and audit areas . </Li> <P> According to the BCBS Supervisory Guidelines, an AMA framework must include the use of four data elements: (i) Internal loss data (ILD), (ii) External data (ED), (iii) Scenario analysis (SBA), and (iv) Business environment and internal control factors (BEICFs). </P> <P> While AMA does not specify the use of any particular modeling technique, one common approach taken in the banking industry is the loss distribution approach (LDA). With LDA, a bank first segments operational losses into homogeneous segments, called units of measure (UoMs). For each unit of measure, the bank then constructs a loss distribution that represents its expectation of total losses that can materialize in a one - year horizon . Given that data sufficiency is a major challenge for the industry, annual loss distribution cannot be built directly using annual loss figures . Instead, a bank will develop a frequency distribution that describes the number of loss events in a given year, and a severity distribution that describes the loss amount of a single loss event . The frequency and severity distributions are assumed to be independent . The convolution of these two distributions then give rise to the (annual) loss distribution . </P>

Which of the following is not correct in case of advanced measurement approach