Basel II sets the pace for operational risk reform

The second Basel Capital Accord plans to make operational risk a tangible part of the amount of capital that a bank has to hold against its risk for the first time. In doing this, banks will now start to find regulatory incentives from measuring and reducing operational risk, as the Accord’s recommendations are taken on board.The Basel II Capital Accord covers three parts of a bank’s risk, including credit risk, market risk and now operational risk. The Accord has more scope than covering op