Basel II

Basel II, also called The New Accord represents recommendations by bank supervisors and central bankers to revise the international standards for measuring the adequacy of a bank's capital. It was created to promote greater consistency in the way banks and banking regulators approach risk management across national borders.

Basel II incorporates substantial changes in the guidelines in several areas, and makes operational risk a new requirement. For banks to comply with Basel II and take full advantage of its reduced capital allocation requirements, they need a comprehensive operational risk management framework and processes in place within their companies.