Through trial and error, the three pillars have evolved and some of the original ideas have proved to be impractical. This popular handbook methodically identifies the fundamental changes and recent additions to Basel II, such as increased flexibility, risk sensitivity and new OpRisk capital charge. It provides a clear rationale for the revised accord and even covers those elements that are still excluded such as liquidity risk, reputational risk and legal risk.
You are presented with a unique opportunity to learn about every possible consequence of the Basel Accord from global thought leaders and fellow practitioners such as Michael Pykhtin, Steven Zhu, Ashish Dev and Scott D. Aguais amongst many others. You will find yourself referring to this essential handbook on a daily basis and find its clear guidelines essential for rolling out and implementing all systems affected by the Accord's various regulations.

Looking at the challenges banks face in complying with the new requirements of Basel II, this invaluable title quantifies the potential downstream impact of Basel II on the financial industry. In addition it assesses the degree of constraint the proposals are likely to impose on business and highlights the profound implications of Basel II on:

• Rating agencies

• Financial industry

• Global and local competition

• Costs and capital

This book is essential reading for any financial practitioner affected by the Basel II accord, including chief financial officers, chief operating officers, chief investment officers, risk managers, credit risk managers, senior compliance officers, and also those working in the fields of operational risk, compliance, regulation, credit, and risk management.

NB. This book replaces The Basel Handbook (1st edition) ISBN 1904339158

Introduction
Michael Ong

Section 1: Parameterisation of the Internal Ratings-Based Approach
• Development and Validation of Key Estimates for Capital Models (Updated)
Michel Araten
• Correlation in Basel II: Derivation and Evaluation (Updated)
Christian Bluhm and Ludger Overbeck
• Explaining the Credit Risk Elements in Basel II (Updated)
Simon Hills
• Loss Given Default and Recovery Risk: From Basel II Standards to Effective Risk Management Tools (Updated)
Andrea Resti and Andrea Sironi
• Assessing the Validity of Basel II Models in Measuring Risk of Credit Portfolios (New)
Leonid V. Philosophov
• Measuring Counterparty Credit Risk for Trading Products under Basel II (New)
Michael Pykhtin and Steven Zhu

Section 2: Implementation and Testing of Compliant IRB Systems
• Implementation of an IRB Compliant Rating System (Updated)
Sebastian Fritz, Michael Luxenburger and Thomas Miehe
• Stress Tests of Banks' Regulatory Capital Adequacy: Application to Tier 1 Capital and to Pillar 2 Stress Tests (Updated)
Esa Jokivuolle and Samu Peura
• Advanced Credit Model Performance Testing to Meet Basel Requirements: How Things Have Changed! (Updated)
Donald R. van Deventer, Xiaoming Wang and Li Li
• Designing and Implementing a Basel II Compliant PIT-TTC Ratings Framework (Updated)
Scott D. Aguais, Lawrence R. Forest, Jr., Martin King, Marie Claire Lennon and
Brola Lordkipanidze
• Basel II in the Light of Moody's KMV Evidence (Updated)
Martti Purhonen
• Dynamics of Rating Systems - TTC versus PIT (New)
Erik Heitfield
• Rating and PD Validation (New)
Dirk Tasche

Section 3: Securitisations and Retail Portfolios
• Basel II Capital Adequacy Rules for Retail Exposures (Updated)
Ashish Dev
• IRB-Compliant Models in Retail Banking
Richard Norgate
• Basel II Capital Adequacy Rules for Securitizations (Updated)
Vandana Rao
• Securitization Issues and Recent Resolutions in Basel II (New)
Ludger Overbeck

Section 4: Regulatory Expectations and Disclosure Issues
• Regulatory Priorities and Expectations in the Implementation of the IRB Approach (Updated)
Edward Duncan
• Market Discipline and Appropriate Disclosure in Basel II
Lawrence J. White
• Validation of Banks' Internal Rating Systems - A Supervisory Perspective (New)
Stefan Blochwitz and Stefan Hohl
• Rebalancing the Three Pillars of Basel II (New)
Jean-Charles Rochet

Section 5: Implementing the Advanced Measurement Approach for Operational Risk
• Implementing a Basel II Scenario-Based AMA for Operational Risk
Ulrich Anders and Gerrit Jan van den Brink
• Loss Distribution Approach in Practice
Antoine Frachot, Olivier Moudoulaud and Thierry Roncalli
• An Operational Risk Ratings Model Approach to Better Measurement and Management of Operational Risk (Updated)
Anthony Peccia

Section 6: Loss Database and Insurance
• Constructing an Operational Event Database
Michael Haubenstock
• Insurance and Operational Risk (Updated)
John Thirwell

Michael K. Ong is professor of finance and director of the finance program at The Stuart Graduate School of Business, Illinois Institute of Technology. He is also executive director of the Center for Financial Markets. Until recently, Dr Ong was executive vice president and chief risk officer for Credit Agricole Indosuez in New York. He had enterprise-wide responsibility for all risk management functions for corporate banking, merchant banking, asset management, capital markets activities, and the Carr Futures Group. Dr Ong received a BS degree in physics, MS degree in applied mathematics, and a PhD degree in applied mathematics from the State University of New York at Stony Brook.