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FSB principles setting out the key elements of an effective risk appetite framework
Set out key elements for: i) an effective risk appetite framework; ii) an effective risk appetite statement; iii) risk limits; and iv) defining the roles and responsibilities of the board of directors and senior management. An appropriate RAF should enable risk capacity, risk appetite, risk limits and risk profile to be considered for business lines and legal entities as relevant, and within the group context. The FSB Principles are high level to allow financial institutions to develop an effective RAF that is institution-specific and reflects its business model and organisation, as well as to enable financial institutions to adapt to the changing economic and regulatory environment in order to manage new types of risk. Establishing an effective RAF helps to reinforce a strong risk culture at financial institutions, which in turn is critical to sound risk management.
Publisher:
Global Standard-Setting Bodies
Release date:
Nov 2013
Type:
Guideline
Peer:
Guidance on Supervisory Interaction With Financial Institutions on Risk Culture
Topics:
Risk management, Corporate governance, Supervisory framework
Sectors:
Banking, Insurance, Securities
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