Good Practices in Cyber Risk Regulation and Supervision
Cyber risk in the financial sector is a critical concern because of the sensitivity, volume, and value of the data handled by financial institutions (FIs)1 and financial market infrastructures (FMIs).2 The importance of this challenge is underscored by the rapid increase in the scope and intensity of cyber threats. The financial
sector is a prime target of cybercriminals given the significant growth and still rising prominence of digital financial services and online transactions. Moreover, critical infrastructure, such as payments, clearing, and settlement, can be targeted by adversaries seeking disruption.
INTEGRATING ESG INTO CREDIT RISK: Recommendations
Banks and financial institutions have long established the practice of using rating models and scorecards for assessing the creditworthiness of their borrowers. These models are tuned to evaluate the borrowers’ ability to repay their debt obligations by focusing on traditional drivers of credit performance, such as industry risk, business risk, financial risk, and management risk.
Solvency as a requirement for emergency liquidity support
Central banks act as lenders of last resort to markets or individual firms. To that end, central banks have developed their toolkits to include various forms of liquidity support. 2 The banking turmoil of 2023 confirmed the importance of liquidity support provided by central banks in times of distress. Some legislatures are considering amending or expanding central bank mandates to allow them to provide liquidity support when financial markets are distressed.
Conduct Risk: trends and challenges for the financial sector
Financial institutions have made great progress in controlling traditional risks, controlling losses and protecting the balance sheet. But, unlike any of the
traditional risks, Conduct Risk drives a total paradigm shift, since it requires institutions to put themselves in the shoes of customers or the parties involved, and to protect their balance sheets (in some cases against the institution’s own short-term interests). Institutions must now focus on protecting their indirect assets, that is, their
customers.
Principles for the sound management of third-
party risk
For years banks have relied on third-party service providers (TPSPs) to obtain specialized expertise, reduce costs, improve efficiency and focus on their core activities. In 2005, supervision focused only on outsourcing, a specific type of these relationships. But with digitalization and the adoption of new technologies, banks have increased their reliance on TPSPs for services they did not previously perform, which has broadened the traditional concept of outsourcing toward a wider focus on all relationships with TPSPs.
Principles for the management of credit risk
Credit risk is one of the main areas of vulnerability in banking activity, given its inherent nature in financing operations. In this context, the document published for public consultation by the Basel Committee on Banking Supervision, titled “Principles for the management of credit risk” updates and reinforces a set of fundamental principles that should guide the prudent management of this risk at financial institutions. Through a structured approach, it seeks to promote a robust control culture that prioritizes early identification, comprehensive assessment and constant monitoring of credit exposures.
Sound practices for managing intraday liquidity risk
Intraday liquidity risk represents a critical dimension of financial management
in the euro area, especially in an environment characterized by payment systems that operate
in real time, high interdependence between institutions and growing digitalization of
funds flows. In response to these conditions, the European Central Bank (ECB) in the document “Sound practices for managing intraday liquidity risk” has identified a
set of sound practices that significant institutions should adopt to strengthen
their capacity to monitor and respond to liquidity stress during the day.
Depositor Behavior and Liquidity and Interest Rate Risks in the Financial System
The growing relevance of depositor behavior within financial risk management has generated renewed interest in the relationship between individual saving decisions and the banking system’s exposure to liquidity and interest rate risks. In this context, the document “Depositor Behaviour and Interest Rate and Liquidity Risks in the Financial System: Lessons from the March 2023 banking turmoil” prepared by the Financial Stability Board offers a critical and deeply structured review of how depositors’ reactions to changes in rates and to shifts in confidence conditions can amplify risks in the financial system.
Prudential Update of the IRRBB Framework: Recalibration of Shocks in the Face of New Conditions of Financial Volatility
The analysis contained in the document on the recalibration of the shocks applicable to interest rate risk in the banking book (IRRBB) presents a technical review grounded in the adjustments proposed by the Basel Committee on Banking Supervision, in order to better reflect current conditions in the global financial market.
Principles for the sound management of third-party risk
In an increasingly digitalized banking environment, reliance on third parties for critical services has grown exponentially. While this trend improves operational efficiency, it also introduces significant risks that must be managed appropriately. In this context, the Basel Committee has established 12 fundamental principles with the aim of optimizing the management of third-party risks, strengthening the resilience of the financial sector and ensuring the operational continuity of banking institutions.
Artificial Intelligence Regulation in the European Union
Regulation (EU) 2024/1689 establishes a harmonized regulatory framework for the development, marketing and use of artificial intelligence (AI) systems within the European Union. Its main objective is to ensure that AI is safe, transparent and respectful of fundamental rights, while fostering innovation and competitiveness in the European market. However, its implementation also entails challenges for the companies and bodies in charge of applying it, which requires a strategic approach to comply with its provisions without affecting the dynamism of the technology sector.
The Global Risks Report 2021
The 16th edition of the Global Risks Report of the World Economic Forum analyzes the risks of social fractures, which manifest through persistent and emerging risks to human health, rising unemployment, widening digital divides, youth disillusionment and geopolitical fragmentation. Companies run the risk of a disorderly reorganization that may exclude groups.
Basel Committee on Banking Supervision
The Basel Framework is the complete set of standards of the Basel Committee on Banking Supervision (BCBS), which is the primary global standard setter for the prudential regulation of banks. BCBS members have agreed to fully implement these standards and apply them to internationally active banks in their jurisdictions.
Basel III: Liquidity Coverage Ratio and liquidity risk monitoring tools.
This document presents one of the Basel Committee’s essential reforms to achieve a more resilient banking sector: the Liquidity Coverage Ratio (LCR). The objective of the LCR is to promote the short-term resilience of banks’ liquidity risk profile.
Reporting requirements (MRI, Documents and MRI support table)
Considering the changes that have taken place in the macroeconomic and financial environment of the Dominican Republic and with the aim of maintaining an efficient and effective supervision system, under Article 56, Letter a) of the Monetary and Financial Law No. 183-02.
2023 EU-WIDE Stress Test – Results
This report is provided for transparency purposes only. The official results are those that have been submitted and confirmed by the competent authorities and published as PDF files by the European Banking Authority (EBA). The cut-off date for the data in this report is July 20, 2023 at 14:00 CET.
The ecosystem imperative
Embedded finance: customer relationships and value network dynamics
Embedded finance: customer relationships and value network dynamics
In this report, the second in a series of four on financial services ecosystems, the Institute of International Finance (IIF) and Deloitte Global explore the concept of embedded finance and how it affects the customer experience.
First study of the maturity level of Risk Management, Survey applied to organizations in Chile
Below, I invite you to review the “First study of the maturity level of Risk Management”, which will allow you to compare your risk management maturity level with the national average or with your industry sector, as well as to identify the new challenges you will face regarding this practice.
Centre for the New Economy and Society. Chief Risk Officers Outlook.
This mid-year briefing on the global risk landscape is based on consultations and surveys with leading chief risk officers from the public and private sectors, organized by the Global Risks Initiative within the World Economic Forum’s Centre for the New Economy and Society.
2023: Bank failures,
Preliminary lessons learned for resolution
Preliminary lessons learned for resolution
The bank failures of the first quarter of 2023 are the first real large-scale test of the international resolution framework established by the Key Attributes of Effective Resolution Regimes for Financial Institutions (“Key Attributes”) after the Global Financial Crisis.
Improving the management and supervision of third-party risk.
Financial institutions rely on external service providers, some of which support their critical operations. These dependencies have increased as part of the digitalization of the financial services sector and can bring multiple benefits to financial institutions.
PwC Financial Services update, change remains a constant in FS Risk & Regulatory
On July 27, the Federal Reserve, the FDIC and the OCC published their long-awaited proposal to implement the final components of the Basel III agreement, also known as Basel III Endgame. In addition, the Federal Reserve also proposed adjustments to the calculation of the capital surcharge for global systemically important banks (G-SIBs).
The state of Artificial Intelligence in 2023: Generative AI’s breakout year
The state of AI confirms the explosive growth of generative AI (gen AI) tools. Less than a year after many of these tools debuted, a third of respondents say their organizations regularly use gen AI in at least one business function.
Basel III: Net Stable Funding Ratio
This document presents the Net Stable Funding Ratio (NSFR), one of the Basel Committee’s essential reforms to promote a more resilient banking sector. The NSFR will require banks to maintain a stable funding profile in relation to the composition of their assets and off-balance-sheet activities. A sustainable funding structure helps reduce the likelihood.
Connect with our networks