Risk management and basel II criteria in Turkısh banking system

Banks ancounter vital risks in continu their activities. These risk, if notmanaged carefully, lead to severe economic and social losses as result of the wideranging and complex banking activities of our age.As far as the risk management is concerned, most of the country economiesimplement the Basel I Capital Accord criteria as an international standard. Theseregulations, by establishing a correlation between the banks? risk constituting creditsand their current capitals, foresee 8% capital accord ratio at the minimum.The changes that emerged as a consequence of the financial liberationpolicies implemented as of 1980s culminated in crucial fluctuations in interests,foreign exchange rates, and in the prices of portable assets. Although the Basel Icriterions were well know in Turkiye, before the crises that emerged in November2000 and February 2001, they were not put in to practice. The application of capitalcompetence was launched as of January 1, 2002 under the auspices and control ofthe Banking Regulations and Supervision Agency (BRSA). In the period we live in,more than 100 countries are preparing to implement the Basel II criterions, whichemploy the operational risks in addition to the credit and market risks foreseen bythe Basel I criteria.Turkish banking system, having conceived the importance of riskmanagement, ought to implement the Basel II criterions in order to construct astronger and effective organization, to attain risk management standards necessaryfor stability, and to be invulnerable to the financial shocks.