Sound practices paper gets positive response

Bankers generally responded positively to the guidance on sound practices for managing operational risk issued by global banking regulators in December.

The primary purpose of the guidance is to give banks an idea of the risk management practices banking supervisors would expect to see in place in a bank under pillar 2 of the proposed three-pillar Basle II bank capital adequacy accord, regulators said.

Under pillar 2 of the accord, banking supervisors will monitor the risk management practices of a bank. If regulators spot shortcomings, they could require a bank to set aside more protective capital, improve its management practices or both.

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