On this front, a risk manager and a bank supervisor share similar interests. A risk manager seeks the best risk measures and management techniques to protect a bank against losses, to hone its competitiveness, and to enhance its profitability and long-term growth. Supervisors, for their part, advocate the use of sound risk management practices to ensure the adequate capitalisation and prudent management of all banks. This, in turn, strengthens the ability of financial sector to withstand periods of distress, to serve as an intermediary of credit through good times and bad, and to contribute to more sustainable growth in the economy. The Basel Committee’s landmark revision of the international bank capital standard represents one of the most important global efforts to encourage the responsible pursuit of risk and rewards and, hence, to promote greater financial stability. This represents the outgrowth of trends in many countries to build incentives into the regulatory framework that encourage banks to identify and understand the risks they face today, to consider what risks may arise tomorrow, and to respond actively and appropriately to both. You’ve been discussing this topic here in Paris for two days now, but all of us have been thinking long and hard about the New Basel Accord for many years. That should come as no surprise, as capital requirements are the foundation of the regulatory framework. Even more importantly, capital is a key ingredient to the health of the banking sector.
More generally, by emphasising principles in the rules - that an AMA must be credible, that it must adequately capture the  4  BIS Review 45/2003  risk of extreme events, that it must be used by banks in the daily management of their operational risk and not just for regulatory capital purposes - enhanced disclosure and transparency may actually result in more consistency in the application of advanced approaches than detailed quantitative criteria. Conclusion The Committee will need to spend the next few months discussing these three themes internally and with the industry to refine the qualifying criteria for the AMA, to determine how best to allocate operational risk capital, and to ensure a level playing field in the application of the operational risk framework. As we conclude today’s conference, I think all of us have a better sense of the work that is ahead for both bankers and supervisors. At the same time, it’s clear from the issues and themes that you’ve been discussing at this conference that we’ve moved beyond a discussion of the principles behind the rules and to a focus on preparing for their implementation. This seems appropriate, since we expect that, given the very good progress that we have noted in banks preparing to adopt the New Accord, supervisors and the industry will be ready to implement the new rules by the end of 2006.