Basel II Compliance And What This Means To Your company

In terms of financial reference data in the banking industry and a company's compliance thereto, Basel II is the second set of regulations set forth in the Basel Accords. The Basel Accords are responsible for the supervision of banking, and the Basel Accords were created by the BCBS which stands for the Basel Committee on Banking Supervision. The BCBS is responsible for the supervision of banking affairs worldwide, and they are the leading authority in banking.

A Basel II operational risk is essentially a risk that comes with the territory of running a business. The Basel II operational risk of a business includes mistakes, occupational hazards, failed inter-workings of the business, events that take place outside of the business and the loss which results from these unavoidable occurrences.

In order for one's company to not be accused or held accountable for a Basel II type event, they must ensure their company follows compliance. These are as follows, misappropriation of assets, bribery; intentional mis-marking of positions, and tax evasion, all are subjects of a the Basel II operational risk. Meaning that if one of these were to take place, one's business could be held accountable for being charged with an absence of Basel II implementation. The avoidance of these is therefore essential to the well-being of a company or business.

The acts that entail internal fraud begin with misappropriation of assets, which is where company assets are either stolen or misused in one manner or another. Other Basel type II events include external fraud, employment practices and safety of the workplace; business, clients and products practice; damage caused to physical assets, system failures and disruption of the business, as well as delivery, execution and management of business processes. External fraud corresponds to the unavoidable happenings of a company that doesn't involve staff or hired individuals that may be held accountable, but rather outside parties. The events that entail external fraud include information theft, third party theft and forgery as well as damage caused by hacking.

Employment practices and the safety of the workplace refer to affairs that take place within the organization, company or business. Instances of this include discrimination in the workplace, issues with worker's compensation, as well as employee health and safety. Instances which would be categorized with business, clients and products involve manipulation of the market, trading that would be considered improper, defects of products, churning of accounts, fiduciary breaches, and also antitrust problems.

Business happenings that could be categorized as having damage caused to physical assets, includes instances where the company or business has become a victim of vandalism, terrorism or to damage that has been caused due to natural disasters. System failures and disruption of the business refers to software and hardware failures as well as utility disruptions. Delivery, execution and management of business processes involve errors in data entry, failed reporting, loss of client assets, and errors from accounting. The Basel II implementation of these regulations ensures that one's company adheres to the essential guidelines of proper Basel II compliance. Therefore completely exonerating them from being held accountable of a Basel II offense.

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