A lot of work over the last few years has gone into the practical applications of the advanced methodologies for Basel II compliance. This is logical, as most of the work that has needed to be done up front has been in developing the credit and operational risk models for the larger institutions.
I believe though, that the time has come for some serious work to be done on the standardised approaches. Banks in the more advanced jurisdictions should not have too much trouble complying with the standarised method for credit risk (except perhaps in collateral management) and the market risk also gives little cause for worry.
Operational risk, where the Sound Principals will have to be implemented, will be a bit more work than the credit or market changes. This will require the development and implementation of whole new systems and processes for every bank. I will be posting more on this area over the next few weeks. In the meantime, feel free to give me a few war stories or let me know where you think the main effort will be.
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