Why we're called Third Pillar

Our name comes from the Basel II Accords’ Three Pillars concept:
Market Risk
Credit Risk
Operational Risk

The First Pillar
Market Risk deals with maintaining the regulatory capital calculated for three major components of risk that a bank faces: Credit, Operational, and Market risk.

  • The credit risk component can be calculated in three different ways: The standardized approach, the Foundation IRB approached, or the Advanced IRB approach.
  • For operational risk, there are three different approaches: The basic indicator approach or BIA, the standardized approach or STA, or advanced measurement approach or AMA. 
  • For market risk the preferred approach is VaR (value at risk).

The Second Pillar
Credit Risk deals with the regulatory responses to the first pillar – providing regulators with much improved tools over those available to them under Basel I. This pillar also provides a framework for dealing with all the other risks a bank may face, such as systemic risk, pension risk, concentration risk, strategic risk, reputation risk, liquidity risk and legal risk, which the Accord combines under the title of residual risk.

The Third Pillar
The third pillar greatly increases the disclosures that the bank must declare. It is designed to allow the market to have a better picture of the overall risk position of the bank and to allow the counter parties of the bank to price and deal appropriately.

As you can see, we chose our name based on meaning of the third pillar, as Third Pillar Systems can greatly reduce you operational risk.