Since the board of directors and management of a bank have, or ought to have, the most complete understanding of the risks that their bank faces, the board and management have primary responsibility for the management of these risks.
Internal ratings are intended to become an integral part of a bank's risk-management process and its own assessment of capital adequacy before such ratings may be applied in the determination of the bank's statutory capital requirement. Supervisory review of capital, the second pillar of the new Accord, will be a critical complement to minimum capital requirements.