The implementation of Advanced Approaches, such as IRB Approach for credit risk and Advanced Measurement Approach for Operational Risk, require much more preparation and pose several challenges for both the banks as well as the supervisors.
The banks would require to meet the minimum requirements relating to internal ratings at the outset and on an ongoing basis, such as those relating to the design of the rating system, operations, controls, corporate governance and estimation  BIS Review 50/2005  3  and validation of credit risk components: Probability of Default (PD) for both Foundation and Advanced IRB, and Loss Given Default (LGD) and Exposure At Default (EAD) for Advanced IRB.