The Basel II Capital Adequacy requirements have been introduced to encourage banks to improve their management of Credit, Market and Operational Risks. Under the new accord comes a risk based capital requirement specifically for Operational Risk. While capital is important it is only one defense against risk. It is also unlikely that it will be the preferred solution.

An increase in capital will not in itself reduce risk, only management action can achieve this. The control of Operational Risk fundamentally lies with good management. This involves a persistent process of vigilance and continued improvement. Operational Risk Management is a value adding activity that impacts, either directly or indirectly on a bank