“The Basel II Framework describes a more comprehensive measure and minimum standard for capital adequacy that national supervisory authorities are now working to implement through domestic rule-making and adoption procedures. It seeks to improve on the existing rules by aligning regulatory capital requirements more closely to the underlying risks that banks face. In addition, the Basel II Framework is intended to promote a more forward-looking approach to capital supervision, one that encourages banks to identify the risks they may face, today and in the future, and to develop or improve their ability to manage those risks. As a result, it is intended to be more flexible and better able to evolve with advances in markets and risk management practices.” (Bank of International Settlements)

After extensive sessions with the project sponsor to understand the BASEL business rules, the team objective is to design and develop an application with the following functionality:

• Calculate Risk Weighted Asset value for all of the exposures which have assessable credit risk within a bank
• Distinguish between and correctly process against the following approaches:
  1. Basel I
  2. Basel II, Standard Comprehensive
  3. Basel II, Foundation Internal Ratings Based.
  4. Basel II, Advanced Internal Ratings Based.
• Calculate the RWA in as descriptive way as possible.
• Provide an adequate security measures for the application
• Provide a Graphical User Interface to the end user.
• Enable the engine to act with different data sets and different settings depending upon the regulator identity defined by the dataset.