The Basel Accord: A tough nut to crack

Crafting a capital charge for operational risk has proven to be a project fraught with controversy. International regulators’ first attempt raised the industry’s hackles. David Keefe reports on recent – and further expected – compromises by the Basel committee.

Global banking supervisors are finding operational risk a tough nut to crack in their controversial efforts to bring it firmly within the remit of bank capital-adequacy rules. Bankers await the supervisors’ further thoughts, expected in the middle of this year, on plans to make major banks set aside capital for the first time to guard against the risk of loss from operational hazards such as fraud, computer system failure, trade settlement errors and catastrophes like the September 11