They will affect, first, the world's major banks and, in due course, their customers, most major corporations. We are at the start of a global effort to incorporate risk management within the structure of all organizations. The Basel focus is important. It is not enough to look at the relative financial strengths of banking institutions. Basel correctly sees that public confidence is the foundation of all banking.
Liquidity is nothing without confidence.
A second underlying theme in many Conference presentations was the continuing belief in quantitative models to measure credit, market, and even operational risks. The credit and market models benefit from substantial internal data, but risk managers stretch to create comparable models for operational risk, where data are scant and unreliable. As the quants continue their ascendancy, I see two problems. The first is the increasing complexity of their language. I admit to a high level of innumeracy but we need better translation if laymen are to comprehend and rely on these quantitative models.