The National Aeronautics and Space Administration, General Motors and Ford Motors have started to attended meetings on the implementation of Basel II to see what they can learn from banks regarding operational risk. "There is a great deal of corporate interest," said Roger Cole, a senior associate director with the banking and regulation division of the Federal Reserve Board.
Banks have better methods of controlling derivatives exposure, said Kim Olson, a managing director and regulatory liaison for Fitch Ratings in New York, explaining banks have been working to improve their management of operational risk since 1998, when Basel II began taking shape. Banks have been pressured to identity operational risk, figure out how to measure it and manage it, she added. Corporates can use the banks' experience to better identify the potential magnitude of loss of their derivatives positions and ensure there are no opportunities for fraud by creating a tight control structure, she noted.
Jeffrey Brown, a senior deputy comptroller in the international and economic affairs division of the Office of the Comptroller of the Currency, said although these are capital rules devised for banking industry he could understand corporations mimicking the practices of banks.
