Loss sharing approach

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In the loss distribution approach estimate (loss Distributed Approaches, LDA) banks in risk management for each individual or group of division-risk combinations, the expected distribution over a future period. The capital deposit is based on a high probability density of a loss frequency distribution. In the LDA, the overall loss frequency distribution is based on assumptions about the likely number and magnitude of risk events that will occur. So both the distribution of the number and the distribution of the amount of loss events are included. It must be noted, however, that both are considered independently of one another, i.e. each represent an independent distribution function. Different distribution functions can be used for each individual assumption. It would make sense to use a Poisson distribution ( discrete probability distribution ) for the number and a logarithmic normal distribution for the magnitude of the loss events. The main difference between the LDA and the internal measurement approach (Internal Measurement Approaches, IMA) is that of the LDA rather aimed at by the fact to a direct assessment of unexpected losses, while the IMA tried the loss estimate non- by assumptions about the relations of linear proportion, linear relationship to estimate expected and unexpected losses.