On the Basel Committee’s Risk Categories in Relation to Financial Institutions and Relevance for Non-Financial Organisations

This essay presents a discussion about the risk categories that are to be found in Basel II and the relevance of these risk categories for financial and non-financial organisations. Global competition has turned risk management into an integral part of doing business. Now organisations can ill afford to remain unprepared and to neglect the impact of risks that affect all aspects of their activities. Basel II included requirements for management of operational risk for requirements related to the prudential management of banks. Operational risks have existed as financial organisations evolved, but this class of risks, which has the capacity for having a substantial impact on any organisation, was only recently recognised. Despite early difficulties that impeded compliance with Basel II, an increasing number of financial organisations have now deployed the information technology required for the management of operational risks.