Multiple choice

2nd Pillar in Basel II relates to

  1. minimum capital

  2. supervisory review

  3. market discipline

  4. risk management
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The second pillar, i.e. Supervisory Review Process, is a regulatory response to the first pillar, giving regulators better 'tools' over those previously available. It also provides a framework for dealing with systemic risk, pension risk, concentration risk, strategic risk, reputational risk, liquidity risk and legal risk, which the accord combines under the title of residual risk. Banks can review their risk management system.

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