Assessing Operational Risks for Basel II Compliance

Basel II is the second of the Basel Accords and poses minimum capital requirements. In line with the framework, financial companies must assess their operational, market and credit risks and form capital reserves to cover these risks. A portion of these requirements, which deal specifically with credit and market risks, were already addressed in the first Basel Accord.

That is why one of the key new requirements of Basel II means that banks must also manage operational risks, which include IT threats and the malicious actions of employees. The more effectively a bank manages an operational risk, the less capital it is required to reserve for that risk. As a result, a bank will be left with more available funds, which in turn has a positive impact on the bank’s competitiveness.

This white paper analyses the requirements of Basel II in terms of operational risks, the structure of these risks and their influence on a company's information infrastructure. Moreover, this white paper will address the opportunities afforded by DeviceLock, Inc.’s product DeviceLock, which can help banks minimize the operational risks that pose a threat to information security.