The Basel 2 Approach to Bank Operational Risk: Regulation on the Wrong Track
RICHARD J. HERRING
(Jacob Safra Professor of International Banking and professor of finance at The Wharton School, University of Pennsylvania in Philadelphia, PA. herring@wharton.upenn.edu)
1231
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
:MCB UP Ltd
Copyright © 2002, MCB UP Limited