A review of the further development of the risk-based supervisory approach, started in 2006, will continue. The preliminary conclusion is that the supervisory process will benefit from further specialisation, focusing on selected risks and business areas of the banking sector to ensure the approach remains effective given the growing complexity in banking operations and the regulatory environment. The HKMA will complete the review in 2007 and implement the recommendations as appropriate. The HKMA will fine-tune its CAMEL rating assessment of AIs to harmonise the system with the supervisory review process under Pillar 2 of Basel II. The revised CAMEL rating system will provide a more detailed assessment of the risk of individual AIs.