Final answer:
The factors that influence the size or magnitude of the risk charge in business include risk factors, volatility, expected loss, correlation, and duration.
Step-by-step explanation:
Several factors can influence the size or magnitude of the risk charge. These factors include:
- Risk factors: The more significant and numerous the risk factors associated with a particular activity or investment, the higher the risk charge will be.
- Volatility: The higher the volatility of the underlying asset or market, the higher the risk charge will be.
- Expected loss: If the expected loss from a particular activity or investment is higher, the risk charge will be larger.
- Correlation: The correlation between different risk factors can also impact the risk charge. A higher correlation can result in a higher risk charge.
- Duration: The length of time over which the risk is expected to materialize can also influence the risk charge