It demands that a bank’s risk management processes should be scaled up to reflect risk appetite and the complexity of operations. Specifically, the bank which engages in more complex nature of businesses should be expected to have in place credible internal risk measurement models and should assess and maintain economic capital, adequate to cover the underlying business risks.
II A need to take action has arisen in the area of the Basle Capital Accord of 1988, since, on the one hand, the nature, scale and complexity of the transactions differ considerably from the conditions prevailing in the late eighties while, on the other hand, the available risk-management techniques have improved substantially in recent years.