The Standardised Measurement Approach (SMA) is a Basel IV regulatory method used by banks to calculate the capital required to cover operational risk. Introduced to replace previous models, SMA combines a bank’s financial statement data with its historical loss experience. By considering both the size of the bank’s business and its actual losses, SMA aims to create a more consistent and risk-sensitive framework for operational risk capital requirements. This approach simplifies regulatory compliance and reduces variability in risk-weighted assets across institutions, promoting greater comparability and stability in the banking sector.