▁has ▁sufficient ▁resources ▁in ▁the ▁use ▁of ▁the ▁approach ▁in ▁the ▁major ▁business ▁lines ▁as ▁well ▁as ▁the ▁control ▁and ▁aud it ▁areas . ▁ ▁The ▁four ▁data ▁elements ▁ ▁According ▁to ▁the ▁BC BS ▁Super vis ory ▁Gu idel ines , ▁an ▁A MA ▁framework ▁must ▁include ▁the ▁use ▁of ▁four ▁data ▁elements : ▁( i ) ▁In ternal ▁loss ▁data ▁( IL D ), ▁( ii ) ▁External ▁data ▁( ED ), ▁( iii ) ▁Sc enario ▁analysis ▁( SB A ), ▁and ▁( iv ) ▁Business ▁environment ▁and ▁internal ▁control ▁factors ▁( BE IC F s ). ▁ ▁L oss ▁distribution ▁approach ▁▁ ▁While ▁A MA ▁does ▁not ▁specify ▁the ▁use ▁of ▁any ▁particular ▁model ing ▁technique , ▁one ▁of ▁the ▁most ▁common ▁approaches ▁taken ▁in ▁the ▁bank ing ▁industry ▁is ▁the ▁loss ▁distribution ▁approach ▁( L DA ). ▁With ▁L DA , ▁a ▁bank ▁first ▁segments ▁oper ational ▁losses ▁into ▁hom ogeneous ▁segments , ▁called ▁units ▁of ▁measure ▁( U o M s ). ▁For ▁each ▁unit ▁of ▁measure , ▁the ▁bank ▁then ▁construct s ▁a ▁loss ▁distribution ▁that ▁represents ▁its ▁expectation ▁of ▁total ▁losses ▁that ▁can ▁material ize ▁in ▁a ▁one - year ▁horizon . ▁Given ▁that ▁data ▁su ffic iency ▁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 ▁sever ity ▁distribution