Advanced measurement approach (AMA) is one of three possible operational risk methods that can be used under Basel II by a bank or other financial institution.
The methods (or approaches) increase in sophistication and risk sensitivity with AMA being the most advanced of the three.
Under AMA 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: 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).