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The Basel 2 Approach to Bank Operational Risk: Regulation on the Wrong Track

RICHARD J. HERRING

Journal of Risk Finance

ISSN: 1526-5943

Article publication date: 1 April 2002

1246

Abstract

The banking industry has adopted an approach to managing financial risk based on economic capital, the amount of capital necessary to achieve a specified level of protection against financial ruin. In the New Basel Capital Accord, regulators have recently proposed capital regulation to reduce operational risk. In this article, the author challenges the rationale for employing a capital charge to mitigate operational risk.

Citation

HERRING, R.J. (2002), "The Basel 2 Approach to Bank Operational Risk: Regulation on the Wrong Track", Journal of Risk Finance, Vol. 4 No. 1, pp. 42-45. https://doi.org/10.1108/eb022953

Publisher

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MCB UP Ltd

Copyright © 2002, MCB UP Limited

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