Standardized Approach

The Standardized Approach refers to a systematic method used in various fields, like finance or education, to evaluate and compare different entities, risks, or performances using uniform criteria. This means applying the same set of rules or guidelines to everyone involved, ensuring consistency and fairness in assessments. For example, in banking, it helps determine how much capital a bank should hold to cover potential losses by using defined risk weights for different types of loans. This approach promotes transparency, comparability, and helps organizations make informed decisions based on standardized metrics.