Industry-focused Compliance - Governance, Risk, and Compliance Topic for Oracle Applications - page 388

The second pillar—Supervisory review process
In the language of the accord, the four key principles of supervisory review are:
• Banks should have a process for assessing their overall capital adequacy in
relation to their risk profile and a strategy for maintaining their capital levels.
• Supervisors should review and evaluate the banks' internal capital adequacy
assessments and strategies, as well as their ability to monitor and ensure their
compliance with regulatory capital ratios. Supervisors should take appropriate
supervisory action if they are not satisfied with the result of this process.
• Supervisors should expect banks to operate above the minimum regulatory
capital ratios.
• Supervisors should seek to intervene at an early stage to prevent capital from
falling below the minimum levels required to support the risk characteristics
of a particular bank and should require rapid remedial action if capital is not
maintained or restored.
The third pillar—Market discipline
The committee aims to encourage market discipline by developing a set of
disclosure requirements, which will allow market participants to assess key pieces
of information on the scope of application, capital, risk exposures, risk assessment
processes, and hence the capital adequacy of the institution. The committee
believes that such disclosures have particular relevance under the framework,
where reliance on internal methodologies gives the banks more discretion in
assessing capital requirements.
Oracle's solutions in the banking sector
Oracle Reveleus delivers a suite of analytical applications for multi-jurisdictional
Basel II compliance and risk management. The following diagram shows the Oracle
Financial Services Data Warehouse architecture: