First, they want to build statistical models mapping the severity and frequency of past operational risk losses and use this to judge the amount of the bank's capital at risk from operational failures in the future.

ECONOMIST: Risk management

The operational-risk part is new: it says that banks' capital should reflect the risk of mistakes and wrongdoing.

ECONOMIST: Bothersome Basel

Pillar 1 breaks up regulatory capital into three parts, to match credit risk, market risk and operational risk.

ECONOMIST: Bothersome Basel