Basel addresses e-banking

Northwestern Financial Review, Aug 15-Aug 31, 2003

The Basel Committee on Banking Supervision has outlined how it expects banks to manage e-banking activities. The committee said general risk management principles must be tailored to address the specific risk characteristics of e-banking, such as speed of change, the global nature of electronic networks and the integration of e-banking into existing systems.

While not dictating specific requirements or best practices, the committee identified 14 risk management principles for electronic banking. The principles do not set specific technical solutions, but the report provides examples of current widespread risk mitigation practices. While the committee has covered some of the material previously, there is new guidance in such areas as outsourcing relationships, security controls, and legal and reputation management.