The New Basel Accord and Operational Risk Management

Operational risk management is an important part in banking risk management. In International Convergence of Capital Measurement and Capital Standards: A Revised Framework, the Basel Committee on Banking Supervision firstly introduced minimum capital requirements-the first pillar for operational risk and required minimum levels of capital for it. It is advisable for domestic banking industry to study the definition, the measurement methodologies, the qualifying criteria and partial use of operational risk management introduced by the Committee. In addition, domestic banks should select operational risk management approaches that are most appropriate for their operations and their financial market infrastructure.