The new Basel Capital Accord (Basel II) will replace the 1988 Basel I Capital Accord and have significant implications for the financial services industry.

The goal of the Accord is to make international financial systems more stable and to put in place incentives for banks to adopt better risk management, risk mitigation and risk pricing techniques.

The new Accord is built upon three mutually reinforcing 'pillars':

Pillar 1 - Minimum capital requirements with new rules for credit and operational risk and an increased emphasis on banks' own internal capabilities in determining minimum capital requirements.

Credit Risk:
> Standard Approach
> Foundation IRB Approach
> Advanced IRB Approach

Operational Risk:
> Basic Indicator Approach
> Standardized Approach
> Advanced Measurement Approaches (AMA)

Pillar 2 - Supervisory review covering an institution's capital adequacy and internal assessment process.

Pillar 3 - Market discipline through effective disclosure to encourage safe and sound banking practices.

The Basel II Accord places new emphasis on banks' internal controls, provides increased flexibility in risk management and enhanced risk sensitivity.

The ADRM Basel II Solution provides a comprehensive consistent data architecture upon which to construct the Basel II pillars consistently, efficiently and economically.

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