4.Operational risk includes legal and compliance risk but excludes strategic and reputational risk. The exclusion of strategic and reputational risk is because they relate more to indirect losses, the definition, measurement and quantification of which would give rise to significant complexities.

5.The operational risk capital charge represents the amount of capital that a bank should maintain as a cushion against losses arising from operational risk.

6.The operational risk capital charge is first calculated using the appropriate approach under Basel III. It is then converted into a risk-weighted asset equivalent by multiplying the charge by 12.5 and adding the result to the total risk-weighted assets for credit risk.