Basel II, II.5 and III Implementation

The developments at the Bank for International Settlements including the changing Basel 2 rules and the new Basel 3 rules continue to present issues for firms to deal with. At Risk Reward we have been working with firms for many years to ensure that their Basel compliant risk management programmes not only meet regulatory requirements but also add value to the firm.

We can help firms at all stages from providing expert guidance and assistance to undertaking complete assignments. Of course the detail and timetable associated with individual Basel implementations will vary between jurisdictions and will also depend on the approach adopted by the firm; however our projects normally include some or all of the following stages:

• A gap analysis which compares current policies and procedures adopted by the firm to the local regulatory requirements, resulting in the development of a report on the actions to be undertaken
  
• Developing and managing a detailed project plan for the entire process
  
• Providing co-sourced support to different elements of the project, with expert consultants using their knowledge to supplement and develop the business team
  
• Developing or reviewing ICAAP reports which meet the demands from the regulator and add value to the business
  
• Designing, calibrating or validating models for credit, market or operational risk to ensure that they have good predictive ability and are forward looking
  Reviewing Basel 2.5 market stress calculations to ensure that they are consistent with local requirements
  
• Creating, validating or reviewing internal loss databases to ensure that they meet regulatory requirements and may be used in capital calculations
  
• Developing and implementing key risk indicators and associated scorecards to make risk management forward looking
  
• Developing, implementing or reviewing risk registers within the business to ensure that they may be consolidated and are used as an effective risk management tool by the business
  
• Reviewing liquidity plans and ratios to ensure that they will both be effective and compliant with the new regulations
  
• Reviewing capital plans, including contingent capital instruments to ensure that they achieve CET 1 compliance
  
• Reviewing or developing consistent and effective enterprise wide stress and scenario modelling, including reverse stress testing and the development of living wills
  
• Developing or reviewing risk reporting including reviewing the role of risk committees and governance structures to ensure that they clearly demonstrate the management and escalation of risk issues
  
• Auditing the risk management process to ensure that it meets regulatory requirements, reporting to the audit committee as appropriate
  

Of course each project is different. Our consultants possess both business and regulatory knowledge. With in excess of 25 years of relevant experience it is this background that enables them to develop practical cost effective solutions to the challenges posed and provide advice to the business on the appropriate decisions to take.

Working globally we can undertake as much or as little of the project as you may require. It is this flexibility together with the quality of our team that ensures that our clients exceed their objectives from our involvement in their projects. Call us to see how Risk Reward can make your Basel implementations more successful.