This challenge has many dimensions and technology will only address some of them. For the BSP, our challenge is to build up technical knowledge and supervisory resources to validate bank’s risk management systems. We will also need to examine our existing charter to see to it that we have the necessary powers to implement Basel II, particularly Pillar 2.
The risk management standards and practices embodied in Basel II are real and are drawn from the best practices of large internationally active banks. It reflects the many insights gathered through practical experience, including both successes and failures in risk management. It contains many useful lessons and can serve as a good roadmap on how to improve internal risk management.