Risky Business

Basel II is changing the way financial institutions look at operational risk, according to a report by McLean, Va.-based business consulting firm BearingPoint. By formally introducing operational risk into risk management and capital calculation, Basel II is moving top-tier institutions to clearly identify, measure and report information related to operational risk. Bjorn Pettersen, managing director at BearingPoint and author of the report, believes that in order to maintain a competitive edge, smaller banks will choose to follow suit.

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