Resources for Basel II Capital Accord (Basel II)

Make risk governance sustainable

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The Organisation for Economic Co-operation and Development (OECD), in a recent estimate, outlined that the overall losses caused by the US mortgage market crisis could hit $300 billion, and the broader credit crunch could inflict greater damage on equity markets.

It was also emphatically indicated that delinquencies and ultimate losses on mortgages could be even more.

Against this backdrop, a "Super Fund" has been mooted to tide over the problem, to some extent. A look at the banks and other financial intermediaries involved in the complex collateralised debt obligation (CDO) based repackaging can be regarded as the pioneers of the modern risk management; and they are all hard hit by the crisis. After all, risk management simply means to introduce systems and practices to contain potential losses.

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