 - Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations. The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision (BSBS). The name for the accords is derived from Basel, Switzerland, where the committee that maintains the accords meets.
Basel II improved on Basel I, first enacted in the 1980s, by offering more complex models for calculating regulatory capital. Essentially, the accord mandates that banks holding riskier assets should be required to have more capital on hand than those maintaining safer portfolios. Basel II also requires companies to publish both the details of risky investments and risk management practices. The full title of the accord is Basel II: The International Convergence of Capital Measurement and Capital Standards - A Revised Framework.
The three essential requirements of Basel II are:
- Mandating that capital allocations by institutional managers are more risk sensitive.
- Separating credit risks from operational risks and quantifying both.
- Reducing the scope or possibility of regulatory arbitrage by attempting to align the real or economic risk precisely with regulatory assessment.
Basel II has resulted in the evolution of a number of strategies to allow banks to make risky investments, such as the subprime mortgage market. Higher risks assets are moved to unregulated parts of holding companies. Alternatively, the risk can be transferred directly to investors by securitization, the process of taking a non-liquid asset or groups of assets and transforming them into a security that can be traded on open markets.
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Learn more about Compliance Regulation and Standard Requirements |
| Basel II risk management and implementation tutorial: Learn where Basel II stands now and how it will likely change. If you're looking to comply with the standard, make sure you know about helpful frameworks that are available. |
| Compliance handbook author expects rise in security regulations: The sheer volume of security legislation can be mind-numbing, but a new book aims to pull together all of the relevant regulations and assist companies in their compliance efforts. |
| Firm Basel II risk management requirements needed now more than ever: Basel II experts say that stricter risk management rules and regulations for banks are just around the corner. |
| USB drive security project protects endpoints, aids CoCo compliance: Caerphilly Council, concerned about USB drive security, describes its search and implementation of a USB drive security product from Safend. |
| Council boosts compliance efforts with system log management app: To address compliance with CoCo, PCI and ISO 27002, a security officer at Surrey Heath Borough Council recently tried a network log management application. |
| Tokenless two-factor authentication helps council with CoCo compliance: Instead of equipping remote workers with security tokens, a Scottish council has found a cost-effective way of sending authentication codes to its employees' mobile phones. |
| PCI DSS requirements still baffling as compliance deadline approaches: The September 2010 PCI DSS deadline is fast approaching and according to some merchants are still struggling with the requirements. |
| New products aim to streamline compliance efforts: Having trouble keeping up with SOX, Basel II and PCI? Two companies are promising to help organizations gain control of their multiple compliance responsibilities. |
| Employee security training for Data Protection Act compliance: Data Protection Act compliance can be difficult to manage, but if employees have no awareness of how to handle sensitive information, it becomes impossible. |
| PCI compliance UK: The future of European merchant PCI compliance: This PCI DSS UK compliance guide offers advice on how to achieve merchant PCI compliance with expert advice and real-world case studies. |
| Quiz: PCI DSS compliance -- Two years later: A five-question multiple-choice quiz to test your understanding of the content presented by expert Diana Kelley in this lesson of SearchSecurity.com's Compliance School. |
| PCI DSS Requirement 1: Install and maintain a firewall configuration: Simply installing a firewall on the network perimeter won't necessarily get you past PCI DSS Requirement 1. Craig Norris explains the extra work that needs to be done. |
| PCI DSS Requirement 10: Track and monitor network access: Many organizations must manually track each system's log files to comply with PCI DSS. In this guide, Craig Norris explains how to pass PCI's troublesome tenth requirement. |
| LAST UPDATED: |
19 May 2010
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