Guideline on Integrating Strategy, Risk and Resilience – IRMSA 2022
IRMSA's groundbreaking guideline tackles the challenge of risk management's value proposition head-on. By advocating for the seamless integration of strategy, risk, and resilience, it empowers organisations to navigate complexity, make holistic decisions, and create sustainable value. This innovative approach promises to revolutionise how businesses operate in today's VUCA environment.
Guide: Risk and Managing Risk Explained
Risk-taking is fundamental to the success of any organisation. The leaders of an organisation must decide the extent to which risk needs to be sought, accepted, addressed or avoided, and their approach to this will determine how risks are managed across their organisation.
Corporate Governance Principles for Banks (BCBS)
Effective corporate governance is critical to the proper functioning of the banking sector and the economy as a whole. Banks perform a crucial role in the economy by intermediating funds from savers and depositors to activities that support enterprise and help drive economic growth. Banks’ safety and soundness are key to financial stability, and the manner in which they conduct their business, therefore, is central to economic health. Governance weaknesses at banks that play a significant role in the financial system can result in the transmission of problems across the banking sector and the economy as a whole.
Minimum Capital Requirements for Market Risk (BCBS)
This document sets outs the amended minimum capital requirements for market risk that will serve as the Pillar 1 minimum capital requirement as of 1 January 2022, replacing the current minimum capital requirements for market risk as set out in Basel II1 and its subsequent amendments.
Principles for Operational Resilience (BCBS)
In the years that followed the Great Financial Crisis (GFC) of 2007–09, the Basel Committee’s reforms of its prudential framework have enhanced the supervision of the global banking system and resulted in a number of structural changes to strengthen banks’ financial resilience. While significantly higher levels of capital and liquidity have improved banks’ ability to absorb financial shocks, the Committee believes that further work is necessary to strengthen banks’ ability to absorb operational risk-related events, such as pandemics, cyber incidents, technology failures and natural disasters, which could cause significant operational failures or wide-scale disruptions in financial markets. In light of the critical role that banks play in the operation of the global financial infrastructure, increasing their resilience would provide additional safeguards to the financial system.
Principles for Effective Risk Data Aggregation and Risk Reporting (BCBS)
One of the most significant lessons learned from the global financial crisis that began in 2007 was that banks’ information technology (IT) and data architectures were inadequate to support the broad management of financial risks. Many banks lacked the ability to aggregate risk exposures and identify concentrations quickly and accurately at the bank group level, across business lines and between legal entities. Some banks were unable to manage their risks properly because of weak risk data aggregation capabilities and risk reporting practices. This had severe consequences to the banks themselves and to the stability of the financial system as a whole.
Revisions to the Principles for the Sound Management of Operational Risk (BCBS)
In March 2021, the Basel Committee on Banking Supervision (BCBS) published its Revisions to the Principles for the Sound Management of Operational Risk (PSMOR). The principles were introduced in 2003 and subsequently revised in 2011 to incorporate the lessons from the Great Financial Crisis. The 2021 revisions resulted from a 2014 review that indicated that several principles had not been adequately implemented and did not sufficiently capture certain important sources of operational risk.
The 2023 Banking Turmoil and Liquidity Risk: a Progress Report (BCBS)
The banking turmoil of March-May 2023 was the most significant system-wide banking stress since the Great Financial Crisis in terms of scale and scope. Over the span of 11 days – from 8 to 19 March 2023 – four banks with total assets of about $900 billion were shut down, put into receivership or rescued. Subsequently, a bank with roughly $230 billion of assets was closed on 1 May 2023. The bank failures, while having largely distinct causes, triggered a broader crisis of confidence in the resilience of banks and banking systems across multiple jurisdictions.
Guidelines for Counterparty Credit Risk Management (BCBS)
These guidelines set out critical aspects of effective management of banks’ counterparty credit risk (CCR) and sound practices regarding what constitutes a robust CCR management framework. CCR is the risk that the counterparty to a transaction could default before the final settlement of a transaction’s cash flows. CCR is a multidimensional form of risk, affected by both the exposure to a counterparty as well as the credit quality of the counterparty, both of which can be sensitive to highly dynamic and fast-moving changes in financial markets.
Guidelines for Identification and Management of Step-in Risk (BCBS)
By publishing these guidelines, the Basel Committee on Banking Supervision aims to mitigate potential spillover effects from the shadow banking system to banks. This work is part of the G20 initiative to strengthen the oversight and regulation of the shadow banking system to mitigate systemic risks, in particular risks arising due to banks’ interactions with shadow banking entities.
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