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Enterprise Risk Management

A comparative analysis of COSO I and II Vs. Basel I and II. How does Enterprise Risk Management relate to Basel Capital Accord?

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A comparative analysis of COSO I and II Vs. Basel I and II.
COSO is a voluntary private sector organization in the United States to improve organizational governance, business ethics, internal control, enterprise risk management, fraud, and financial reporting. COSO I was a document created in 1992 on internal control, whereas COSO II is an integrated framework for Enterprise Risk Management. COSO II has eight elements (Cendrowski Harry, Mair William C2009).

The Basel I and II have been established by The Basel Committee on Banking Supervision. This is a committee of banking supervisory authorities set up by the central bank governors of the Group of Ten countries (SANDERS, Ozdemir Bogie, Miu Peter 2008),. Basel I is the round of deliberations by central bankers in 1988 and it published minimum capital requirement for banks. This was enforced in the Group of Ten countries. In 2004, Basel II was published which was an international standard for banking regulators to control how much capital banks need to put aside for risk management ( Kenneth Carling, Jacobson Tor, Linde Jesper, and Roszbach Kasper 2002).

The essential difference between COSO and Basel is that COSO originated in the US and addresses all organizations (COSO 2004 a). On the other Basel is related to regulation of the banking industry. Basel was formed to ensure that banks have adequate resources to account for the risks that banking industry faces (Chapman, Robert J. 2006).. These resources are related to the risks to which the banks are exposed. ...

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