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Basel II: Capital and Risk Management

Basel II lays down new guidelines for determining minimum capital requirements for banks to manage different risk exposures. It establishes a new system for weighting credit and market risks. Basel II divides risk management into categories for market risk, credit risk, and operational risk. Risk exposures faced by banks that require monitoring include credit, market, liquidity, foreign exchange, large exposures, equity price, real estate price, and operational risks.

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56 views1 page

Basel II: Capital and Risk Management

Basel II lays down new guidelines for determining minimum capital requirements for banks to manage different risk exposures. It establishes a new system for weighting credit and market risks. Basel II divides risk management into categories for market risk, credit risk, and operational risk. Risk exposures faced by banks that require monitoring include credit, market, liquidity, foreign exchange, large exposures, equity price, real estate price, and operational risks.

Uploaded by

apanisile14142
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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BASE II : capital requirements, to manage risk exposures.

Define basel 11 Enumerate capital requirements for basel 11. Enumerate different forms of risk exposures. Elaborate on how these requirements can manage these risk exposures.

Definition of Basel II Basel II - short for the new Basel Capital Accord - lays down new guidelines for determining the minimum solvency requirements for banks. The main change in these guidelines is a new system for weighting the risks run by banks in their loans to retail and corporate customers. The objective of Basel II is to improve the soundness of the financial system.

In Basel II, risk management is divided into Market risk, and Credit risk and Operational risk. In many cases, credit and market risks are handled through a company's financial department, whereas operational risk management is perhaps coordinated centrally but most commonly implemented in different operational units.

Definition of risk exposures:


In terms of financial stability analysis, among the types of risk exposures faced by a deposit-taker that require monitoring are included credit risk, market risk, liquidity risk, foreign exchange risk, large exposures risk, equity price risk, and real estate price risk. Operational risk.

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