Zurich Financial Services has set up a consulting company called "Zurich IC2" to help banks assess risks for regulatory purposes under new global capital rules.

Zurich jumps on Basel bandwagon

Zurich Financial Services has set up a consulting company called "Zurich IC2" to help banks assess risks for regulatory purposes under new global capital rules.

Zurich IC2 is one of a growing number of niche products and services which insurers are providing in response to new rules being drafted by the Basel Committee on Banking Supervision, a group of international regulatory and central banking experts.

Implementation of the new rules, collectively known as "Basel 2", is expected to start in 2004.

Among its other pioneering efforts, Basel 2 for the first time seeks to quantify the amount of capital banks must set aside to cover what is called "operational risk". Such risk must include losses arising from things like human error, or computer failure.

Calculating the amount of money needed to cover such risk is difficult, bankers say. But the insurance industry could have an edge given its traditional job of predicting the probability of accidents.

Zurich IC2 offers banks a way to manage operational risk, using a combination of consulting and software services, as well as a proprietary data base which contains quantitative information and case studies acquired from Zurich's insurance activities, a spokesman for the group said.

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