High-level principles for risk management

CEBS publishes high-level principles for risk management – On 16 February 2010, the Committee of European Banking Supervisors (CEBS) published its high level principles for risk management (principles). On 8 April 2009, CEBS announced that it intended to consolidate into a comprehensive guidebook its various existing principles and guidelines addressing risk management issues and that it would develop high level principles to introduce the consolidation process. CEBS also published a consultation paper (CP24) on the draft principles. CEBS has now published the final version of the principles. This takes into account feedback received by CEBS during consultation but does not appear to have altered materially from the version consulted on in April 2009.

The principles relate to the following areas:

Governance and risk culture.
Risk appetite and tolerance.
The role of the Chief Risk Officer and the risk management function.
Risk models and integration of risk management areas.
New product approval policy and process.

The principles are intended to be used by financial institutions as part of their internal capital adequacy assessment process (ICAAP), and by supervisors within the supervisory review framework under Pillar 2 of Basel II. The principles are aimed at large and complex institutions, although CEBS considers they could be adapted to any institution.

CEBS expects its members to implement the principles by 31 December 2010. CEBS has also published separately feedback on its April 2009 consultation.