مدیریت ریسک در مقابل اقدام عملیاتی : بازل دوم در زمینه سوئدی

The New Basel Capital Accord, Basel II, promotes standards for measurement of financial and operational risk in the banking industry. Its approach to such risk measurement has been severely criticized in the literature, inevitably raising doubts concerning the effectiveness of Basel II. Using data from 25 semi-structured interviews with banking staff in four Swedish banks, the study suggests that Basel II is well established in practice, but there are significant concerns that such measurement of risk may adversely affect banks’ activities. Whilst Basel II is generally supported by banking staff who work directly with risk measurement, its usefulness is questioned by banking staff in operations. This difference between these two groups may be explained in relation to variations in their respective frames of reference. Both groups are inclined to take account of information that meshes well with their existing frames of reference and are thus more inclined to value changes that accord with their own viewpoints. One suggestion for addressing this schism within banks is to encourage a wider debate about the various approaches to implementing Basel II.

Basel II,1 the New Capital Accord issued by the Basel Committee in 2004 seeks to foster a secure and reliable financial sector (Basel Committee, 2004a), leading to improved stabilization in the security of daily payment systems. Compared to Basel I, its predecessor, Basel II goes further in regulating the measurement of financial and operational risk at individual banking institutions. However, despite its good intentions, there have been criticisms of Basel II's approach to enhancing banking stability and security (Blejer, 2006, Danielsson et al., 2002, Heid, 2007 and Jarrow, 2007). The very notion of risk measurement itself has even been questioned (McGoun, 1992 and McGoun, 1995). The critical literature of risk measurement (cf. Chua, 1996, McGoun, 1992, McGoun, 1995 and Young, 2001) is based on a logical reasoning. In this study the critique of risk measurement is complemented by empirical data from semi-structured interviews with 25 Swedish bank officers involved in the implementation of the Basel II regulations. In the analysis of the interview data, both positive and negative perceptions of Basel II emerged that had implications for how the regulation was implemented. Thus, the aim of this study is to answer the question: How do bank staff perceptions define contextual outcomes within a Basel II implementation setting? Accounting regulation in practice and in management research is a problematic area. Bromwich and Hong (2000) in particular emphasise that regulation raises many difficult questions regarding application. As this is an area that often seems neglected by management research, Bromwich and Hong strongly encouraged accounting researchers to study accounting problems and issues in regulated industries. One approach is to focus on the accounting system. This is the approach these authors took in their detailed analysis of the British Telecom accounting system, the purpose of which was to set charges for interconnection. Another approach, the one taken by this study, is to focus on users’ opinions of regulation rather than on the accounting system. This study is also distinct from the Bromwich and Hong study in that it presents empirical material from another highly regulated industry, in this case, the banking sector. It is claimed that “accounting is what accountants do” (Young, 2006, p. 581). In Basel II incentives exist to measure risk and to use the information acquired in internal decision making (Basel Committee, 2004b). Accountants are involved with building up such information systems and processing the resulting information for internal decisions. Accountants also use Basel II to report to supervisory authorities and to inform the market of the levels of bank risk. Thus accountants and Basel II have become closely interrelated. Like its predecessor, Basel I, it is anticipated that Basel II will be used worldwide (Basel Committee, 2004b). In comparison with Basel I, however, it is expected that Basel II will reward banks that measure risk levels2 and use this information in their daily business to lower their required capital reserves. With lower capital reserves, more capital is freed up for investment, resulting in increased profits. Banking staff from the four largest Swedish banks who were interviewed in this study expressed both positive and negative opinions of Basel II. The most frequently stated positive opinions were that the measurement of risk is deeply rooted in bank practice, that there are great advantages to measuring risk using the models some banks have already developed and were allowed to use, and that Basel II creates more efficient internal systems and better measurements for control of risk. Amongst the most commonly expressed negative opinions, interviewees stated their resistance to allowing quantitative risk modelling to unduly influence daily practice, their concern that theoretically derived models do not actually work in practice, their fear of increased centralisation, and their belief that the good practice formulations in Basel II were altogether too vague. Additionally, interviewees felt that the implementation of Basel II required excessively large amounts of resources. Clearly, the positive opinions were expressed by the category of interviewees, including risk managers and project leaders, who worked directly with risk management and assessment. Conversely, most negative opinions were expressed by interviewees engaged primarily in operational tasks. The differences in the groups can be explained in terms of frames of reference. Consistent with typical human behaviour as shown in prior research, these interviewees were most likely to accept changes that supported their pre-existing beliefs (Bateson, 1972, Hedberg and Jönsson, 1978, Jönsson and Lundin, 1977 and Young, 2003). An additional intent of this study is to contribute to the critical literature on accounting numbers. This literature criticizes the role of the researcher in society and calls for the academic community to take a greater role in improving practice (Briloff, 1993, Lee, 1995, Lee, 2006, Sikka et al., 1995, Tinker, 2002, Tinker and Carter, 2002, West, 2003 and Willmott et al., 1993). The paper is structured as follows. The Basel Committee and the rationale underpinning Basel II are summarized, followed by a critique of its measurement of risk approach and then by an outline of the method. Thereafter, the paper presents and analyzes the interviewees’ opinions. The research findings are then presented and discussed. The paper concludes with a proposed solution for overcoming the problems that potentially arise owing to conflicting bank officers’ opinions of Basel II. Finally, the paper makes suggestions for future research in the area.

In this study, the chief purpose was to investigate the perceptions of Basel II amongst Swedish bankers through the use of semi-structured interviews conducted at Sweden's four largest banks as they worked to implement the new capital reserve requirements specified by the new banking regulation. Basel II provides powerful incentives to promote the successful measurement of risk by banks and actively encourages them to develop and implement their own analytical models based on their own data. However, the critical literature has seriously questioned this numerically based approach to the measurement of risk. The question that thus demands our attention is: How do perceptions define contextual outcomes within a Basel II implementation setting? It is argued here that this question can most usefully be addressed by investigating and analysing opinions of bank officers whose day-to-day work is affected by the Basel II regulations. The study revealed strong, favourable support for the new regulations but also sharp, unfavourable criticism. The interview results, categorised as positive and negative opinions, are illustrated through representative interviewees’ statements accompanied by analysis and discussion. A suggestion for a way to resolve these conflicting opinions is proposed, followed by suggestions for future research, presented in the last section. 7.1. Summary of results and explanation The positive opinions of Basel II revealed in these interviews were in no sense unexpected since Basel II is well established and supported in practice. Bank interviewees in this study recognized the benefits associated with using their own risk measurement models that Basel II encourages and permits. For example, the interviewees appreciated Basel II's more sensitive and context applicable regulation for minimum capital reserves and its encouragement of the development of internal systems that are more effective and efficient in risk control. These positive opinions were articulated by banking staff working closely with risk measurement, such as risk managers and project leaders for Basel II. However, it was clear that such opinions were much more strongly expressed by staff at the three banks in the study with centralised management structures and much less so by staff at the fourth bank that uses a more decentralised branch structure. In the study, the negative opinions expressed by the interviewees primarily questioned the functionality of Basel II. Except for rather “minor” objections – Basel II is too resource intensive and too vaguely written, for instance – the interviewees raised some fundamental criticisms, ranging from specific concerns questioning whether the risk measurement models would actually work in practice to broader concerns questioning the ability of Basel II to protect the banking sector from financial distress. These criticisms, particularly the doubts about the usefulness of measurement risk models, hinted at a problem of knowledge clash between different areas of operational practice within the banks, specifically between operating managers and risk managers. Additionally, the interviewees claimed that Basel II had the potential to create increased centralisation of management decision making at the expense of bank systems that tend to delegate more authority to the branches. Unsurprisingly, staff in operations at the decentralised bank in this study voiced this negative opinion. Of most interest for this study are the negative opinions that the interviews brought forth. These findings suggest there are serious, potentially negative outcomes in the implementation of Basel II in the banking industry. For instance, if, as a result of Basel II, the concept of centralised management diminishes, even replaces, more decentralised management structures, there is a risk of disillusionment and demotivation, leading to productivity loss amongst employees working in banks where the branches have enjoyed considerable discretion in decision making. Equally possible and equally discouraging is the potential outcome that banking staff at decentralised banks will tend to ignore Basel II as mere window dressing for the industry. It is useful to ask why there is such a diversity of opinion on Basel II. One answer may be related to the various banking responsibilities of the interviewees. Based on their responses in the study, it appears that the positive opinions were more strongly emphasised by Basel II project leaders, risk managers and headquarters personnel directly involved with the implementation of the new regulation. In contrast, the negative opinions came from banking staff primarily involved with operational assignments, particularly those at the bank with the most decentralised management structure. Having identified the bank employees who were most negative toward Basel II, we may ask why the nature of their work distinguishes them from the employees generally positive toward Basel II. The answer appears to be a matter of employees’ pre-existing frames of reference. As noted, those individuals identified in the study who most strongly supported Basel II were the risk managers, project leaders and other staff directly involved with the measurement of risk. The commonality of this group is that all individuals were quite comfortable in the tradition of risk measurement. In working within a framework such as Basel II, they were positively disposed to the concept of and benefits associated with risk measurement. Thus, it was natural for this category of staff to appreciate the regulation since it accords with their pre-existing frames of reference. From their perspective, if Basel II improved internal systems and facilitated risk management, the good practice of centralised banks would be advanced. Additionally, the universal support for Basel II by banking authorities such as central banks and prominent public figures in the industry confirmed the positive opinions held by these bank officers. On the other hand, the study's interviewees who expressed negative opinions of Basel II held positions such as head of auditing, head of retail division and credit officer. In their work, this group was involved in the day-to-day, operational tasks of foreseeing and avoiding problems. They were most interested in practical, problem-solving information and in the various, complex social relationships their work required. For them, their previous and personal experience was considered vital to the success of their work and, as a result, they had little interest in the numerical quantification of a specified risk and little confidence in the ability of numbers to accurately represent complex and dynamic realities. 7.2. The contribution to the literature The findings of this study contribute to the literature on several dimensions. Whilst earlier critical literature of risk measurement by Chua (1996), McGoun, 1992 and McGoun, 1995, and Young (2001), takes a logical reasoning perspective, this study moves the analysis one step forward by providing evidence of users’ perceptions from everyday practice. Moreover, this study contributes to the literature of management research and accounting regulation in practice as called for by Bromwich and Hong (2000) in their detailed study of the British Telecoms accounting system where they encouraged more studies of application from highly regulated industries. This study expands on the work of Bromwich and Hong (2000) in at least two aspects. In contrast to their investigation of the accounting system in the telecom industry, evidence is presented here on how interviewed staff in a different regulated industry actually perceived regulation promulgated by an international organisation. The question that then arises is how the potential problems arising from the negative opinions of Basel II can be addressed. One suggestion is to engage representatives from the academic community, as well as banking staff, in an industry-wide debate. In open forums, through public debate, the objections to Basel II may be examined, discussed and resolved, even avoided. This suggestion fits well in the literature that is concerned with the role of researchers in society (Briloff, 1993, Lee, 2006, Sikka et al., 1995, Tinker, 2002, Tinker and Carter, 2002, West, 2003 and Willmott et al., 1993). In particular, Briloff (1993), Chua (1996) and Lee (2006) have all argued that university education has little relevance for everyday practice. If researchers in accounting, finance and economics engage more with the topic of bank regulations in a discussion of the possible consequences of Basel II, the issue would be opened up to public debate with the participation of practitioners and academics in several areas. Such a discussion from many angles could lead to an understanding of regulation that is closer to everyday practice. In addition, university education might begin to address more directly the questions and problems typical of the so-called real world of work. In return, in an open exchange of ideas with the world of academics, bank managers might also benefit from approaching their work from a more theoretical angle. 7.3. Suggestions for future research In conclusion, it may be said that this study raises a number of issues about the perceptions of Basel II implementation. Although the focus of the study is a Swedish setting, these issues may be relevant to bankers in other settings that fall under the Basel II dominion, as well as to other regulated industries affected by international regulation. Possibly the most important of these issues concerns how an organisation's management structure affects the implementation of an international regulation imposed upon it. The study reveals that implementation of outside regulation is best supported by a management structure built on centralisation. The concern is that resistance to a new regulation, carried to an extreme, has the potential to harm the organisation if it regards the regulation as mere window dressing and fails to take advantage of the benefits implicit in implementing it. Yet some form of a centralised management structure seems essential for uniform implementation of a new company-wide regulation. Further research into the issue of the most effective management structure for the adoption of imposed regulation is of interest, whether in the banking or some other regulated industry. Paradoxically, the most decentralised bank of the four banks investigated in this study was the only bank that did not have to ask the Swedish government for funding at the time of the national financial crisis in the beginning of the 1990s. Furthermore, the profitability of this bank during the 1990s was much better than that of the three centralised banks in the study (Wallander, 1999). Given this record of stability and profitability, a question arises: How would such successful, decentralised banks react to a regulation imposed upon them that has more obvious benefits and advantages for banks with centralised structures? Such a question leads to further questions: How would existing management styles be challenged? How would working conditions be influenced? How would employee motivation and morale be affected? Such questions are important since the advantages associated with decentralised organisations are, primarily, related to employee motivation and engagement, which, as has been shown, lead to greater productivity than in centralised organisations (Jönsson, 1995 and Wallander, 1999). Especially in the banking industry, a marginal business, such questions require further investigation.