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The term "Basic Approach" or "Basic Indicator Approach" refers to a set of operational risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions.
Based on the original Basel Accord, banks using the Basic Indicator Approach must hold capital for operational risk equal to the average over the previous three years of a fixed percentage of positive annual gross income. Figures for any year in which annual gross income is negative or zero should be excluded from both the numerator and denominator when calculating the average.
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