Key regulations: supervision
Guidance on step-in risk identification and management
Scope: Global | Regulator: BCBS | Industry: Finance | Theme: Risks –Other Risks | Date of publication: 25/10/2017
The Basel Committee on Banking Supervision's Guidelines on Step-in Risk address the risk that banks may decide to provide financial support to unconsolidated institutions that are experience+ing financial stress. The guidelines help identify and manage these risks. They ensure that banks assess the possibility that they may be forced to step in to support such institutions in order to protect their own reputation. The goal of implementation is to enhance financial stability by limiting the unseen risks that can affect the banking system in times of crisis.
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Insurance Core Principles and Common Framework for the Supervision of Internationally Active Insurance Groups
Scope: Global | Regulator: IAIS | Industry: Insurance | Theme: Supervisory expectations| Date: 05/12/2024
The Insurance Core Principles (ICPs) and the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame), established by the IAIS, seek to ensure fair, safe and stable insurance markets globally, protecting policyholders and contributing to financial stability. The ICPs establish a general regulatory framework applicable to all jurisdictions, while ComFrame focuses on specific requirements for supervising international insurance groups, promoting coordination between supervisors and minimizing regulatory gaps.
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Guidance on risk governance and risk culture
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Corporate governance | Date of publication: 24/07/2024
This guidance sets out the key supervisory expectations for governance and risk culture in banks. Replacing the 2016 supervisory statement, the guidance emphasizes the importance of diverse and effective governing bodies, and details how these bodies should be composed and function. It also addresses the responsibilities of internal control functions, the importance of a strong risk culture and expectations on risk appetite frameworks. The aim is to guide banks towards more effective internal governance and a robust risk culture, thereby enhancing their decision-making capacity and operational resilience.
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Guidance for Effective Risk Data Aggregation and Risk Reporting (RDA&RR)
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Risks – Reporting | Date of publication: 01/05/2024
This guidance sets out minimum supervisory expectations for financial institutions to improve risk data management and aggregation. It emphasizes the importance of robust internal frameworks and management information systems (MIS) to ensure the accuracy, completeness and timeliness of data. It also emphasizes the need for robust risk, financial and supervisory data reporting capabilities, and addresses common weaknesses in data governance and IT infrastructures. The goal is to strengthen decision making and risk governance, improving the resilience and transparency of financial institutions.
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Internal Rating Based Modeling Guide
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Risks – Internal Models | Date of publication: 19/02/2024
This guidance clarifies how institutions should incorporate climate and environmental risks into their models and provides clarification for banks wishing to revert to the standardized approach for calculating their risk-weighted assets. Specifically for credit risk, the ECB focuses on probability of default issues.
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Supervision Manual
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Risks – Capital | Date of publication: 04/01/2024
This manual explains how the European Central Bank supervises banking institutions in the euro area. It describes the principles and procedures of the Single Supervisory Mechanism (SSM) to ensure consistent and effective supervision, covering risk assessment, the implementation of prudential measures and ongoing supervision. The document aims to ensure the stability of the financial system and promote sound banking practices, and details the procedures to be followed in supervisory inspections and reviews.
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Good practice in Counterparty Credit Risk governance and management
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Risks – Credit| Date of publication: 01/10/2023
This document provides Guidelines for banks to improve the governance and management of Counterparty Credit Risk (CCR). The guidance highlights the importance of conducting thorough due diligence both at inception and on an ongoing basis, developing comprehensive credit risk mitigation strategies, and using a variety of complementary metrics to measure, monitor and limit CCR. It also emphasises the need for a robust governance framework to effectively manage counterparty exposures, especially in a context of high volatility and risk.
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Guide on climate-related and environmental risks
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Sustainability - Risk Management – Environment | Date of publication: 27/11/2020
Guidelines for financial institutions to identify, manage and disclose risks associated with climate change and other environmental factors. The guidance aims to improve the integration of climate risks into risk management and assessment processes, promote transparency and disclosure of environmental impacts, and help institutions adapt to the transition to a more sustainable economy.
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Guide to ICAAP
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Risks – Capital | Date of publication: 09/11/2018
This guide provides a framework for banks to properly assess and manage their capital adequacy. It sets out key principles for identifying, quantifying and managing risks that may affect the solvency of financial institutions. It also emphasizes the need to integrate these assessments into the overall management of the institution, using both regulatory (regulatory compliance) and economic (business-specific risk analysis) perspectives. The goal is to ensure that banks maintain adequate levels of capital against the risks they face, even in adverse situations.
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Guide to ILAAP
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Risks - Liquidity | Date of publication: 09/11/2018
This guide establishes a framework for banks to comprehensively manage their liquidity risks, ensuring that they have sufficient reserves and structures in place to deal with adverse events. The guide details how institutions should identify, measure and manage liquidity risk, incorporating both qualitative and quantitative assessment practices. It also promotes the integration of ILAAP into the institution's decision-making processes to ensure that adequate levels of liquidity are maintained under different scenarios, thereby strengthening the resilience of the banking sector.
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Addendum to the Guidance to banks on non-performing loans
Scope: EU | Regulator: ECB | Industry: Finance | Topic: Risks – Credit | Date of publication: 15/03/2018
This document sets out specific supervisory expectations on minimum prudential provisioning levels for doubtful exposures (NPEs). The addendum supplements the original guidance by detailing how institutions should provision appropriately based on the ageing of exposures and available collateral. The objective is to avoid excessive accumulation of uncovered NPE on balance sheets, and to promote prudent and timely treatment of these assets in order to strengthen financial stability and allow institutions to focus on their core business.
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Guidance on leveraged transactions
Scope: EU | Regulator: ECB | Industry: Finance | Theme: Risks – Other Risks | Date of publication: 16/05/2017
It sets out the Enforcer's expectations for the management of risks associated with leveraged transactions in financial institutions. The guidance defines a leveraged transaction as one where the borrower's total debt to EBITDA ratio exceeds 4.0, or where the borrower is controlled by a financial sponsor. It sets out guidelines for the internal governance, risk assessment and supervision of these transactions, including specific requirements for loan syndication and the treatment of highly leveraged transactions, to ensure prudent practices and mitigate systemic risk in the banking sector.
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Guidance to banks on non-performing loans
Scope: EU | Regulator: ECB | Industry: Finance: Theme: Risks – Credit| Date of publication: 20/03/2017
This document provides guidance on the identification, management, measurement and write-off of non-performing loans (NPLs). It emphasizes the need for realistic and ambitious strategies to reduce NPLs, and sets out procedures and good practices that institutions should adopt. It also addresses aspects of governance, internal control and regulatory reporting, with the aim of strengthening institutions' balance sheets and improving their ability to lend to the economy.
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