In order to upgrade the risk management systems, banks need to upgrade their technology proportionately so that the MIS and the analytical tools for risk management are available. This will entail large investments in technology particularly for those banks who have to migrate to the advanced approaches under Basel II. 42.
Confidence in official reserve data was greatly shaken as it became clear to what extent foreign exchange assets were mortgaged by massive short forward positions in Thailand or by placements in overseas branches of Korean banks facing problems themselves in meeting foreign currency obligations. Moral hazard was also a problem.