Bastiaan Stücken, MSc, FRM’s Post

📢 **Public Consultation by the ECB on the New Draft Guide on Governance and Risk Culture!** 📢 📌 **Announcement:** The European Central Bank (ECB) has launched a public consultation on its new draft guide concerning governance and risk culture. The consultation ends on October 16, 2024. 🌟 **Objectives of the Guide:** - **Strengthen Governance:** Clarify the expectations of supervisory authorities regarding internal governance and risk culture. - **Promote Diversity and Efficiency:** Highlight the importance of diversity and efficiency in management bodies, a priority of the Single Supervisory Mechanism (SSM). - **Provide Best Practices:** Replace the 2016 supervisory statement and share examples of best practices collected by the ECB. 🔍 **Content of the Guide:** 1. **Composition and Functioning of Management Bodies:** Details expectations regarding the composition and functions of management bodies and committees. 2. **Internal Control Functions:** Defines the roles and responsibilities of internal control functions. 3. **Risk Culture:** Emphasizes the importance of a robust risk culture and sets expectations regarding banks' risk appetite frameworks. 📈 **Importance of Governance and Risk Culture:** - Financial crises and bank failures have demonstrated that deficiencies in internal governance and risk culture can lead to difficulties for banks. - Ineffective decision-making processes can create imbalances between risk-taking and risk control, posing risks to capital and compromising the operational resilience of banks. 📊 **Next Steps:** - **End of Consultation:** October 16, 2024 - **Publication of Comments:** The ECB will publish the comments received, along with a feedback statement and the final guide. - **Stakeholder Meeting:** On September 26, 2024, the ECB will organize a meeting with experts from supervised institutions and other interested parties. 🌐 **For more information and to participate:** [Details on the ECB's website](https://lnkd.in/eYwjHPw3) #Governance #Risk #ECB #Banks #Supervision #PublicConsultation #RiskManagement #Diversity #SSM

New ECB Guide on Governance and Risk Culture out for consultation. The Guide will replace 2016 version on how management bodies and committees should be composed and function, spells out the roles and responsibilities of the internal control functions, emphasises the importance of risk culture and outlines expectations regarding the risk appetite frameworks of banks.

The European Central Bank has released its new Draft Guide on #governance and #RiskCulture, replacing the 2016 SSM Supervisory Statement. This guide emphasizes the importance of robust governance frameworks in risk management, highlighting the principle that "well-run banks mean safer banks". The guide aims to bolster the stability and #resilience of the #EU's #banking sector, ensuring a secure #financial system. The consultation period runs until 16 October 2024. For more details, read the full article here: https://lnkd.in/dADfgiCa #GTG #FinancialServices #Fintech #DORA #ECB #RiskManagement #RiskCulture Ian Gauci l Cherise Abela Grech l J.J. Galea

The Evolving Role of G-SIBs: Is Big Beautiful Again? There is a growing appreciation for global systemically important banks. But G-SIBs still face tough risk management standards and high capital requirements, and there is evidence that some extremely large banks are attempting to game the system, potentially increasing systemic risk.

ECB consults on governance and risk culture ECB invites comments from banks and other stakeholders on draft Guide on governance and risk culture. Guide replaces 2016 supervisory statement, clarifies supervisory expectations and shares good practices for banks’ internal governance.

A good speech is always a great read - short, punchy and thought-provoking. Anneli Tuominen, A Member of the Supervisory Board of the European Central Bank, recently gave a speech on governance and risk culture. The key points: ⭐ Good governance and risk culture are essential for banks to make informed decisions. 🇪🇺 In Europe, there's been progress on banks' awareness of governance-related topics, but there are still long-term structural deficiencies in boards. 🤓 Board members should have the necessary knowledge, skills, and experience to contribute to the bank's specific areas of business. 💡 The collective skills of boards is crucial, with a broad range of experience, including risk management and diversity. 🏁 The ability to effectively challenge, including asking the right questions, is essential for boards to properly understand and assess risks. 🤔 Some questions to ask: Do you have a board skills matrix? How are you identifying and filling gaps in the board's skill set? How does your board exhibit 'soft skills' around challenge, constructive criticism and curiosity? What's the culture of your board and how is it shaping the risk culture of the broader organisation?

Governance and risk culture remain insufficient at European banks, even though progress has been made in these important areas. As Marco Folpmers highlights here, in its new guidelines, the European Central Bank (ECB) introduces an important additional layer of criteria that financial risk managers (FRMs) can use to evaluate a bank’s risk culture. However, as Marco further comments, whilst it doesn’t provide a comprehensive description of a "bad bank," it does offers insight on potential red flags, enabling FRMs to incorporate a valuable new tool: the negative checklist. …more

Governance and risk culture remain insufficient at European banks, even though progress has been made in these important areas. As Marco Folpmers highlights here, in its new guidelines, the European Central Bank (ECB) introduces an important additional layer of criteria that financial risk managers (FRMs) can use to evaluate a bank’s risk culture. However, as Marco further comments, whilst it doesn’t provide a comprehensive description of a "bad bank," it does offers insight on potential red flags, enabling FRMs to incorporate a valuable new tool: the negative checklist.

📢 The European Central Bank just published its Draft guide on governance and risk culture. Take a look at the post below published by Maureen Finglass for some initial highlights. Further analysis to be published here soon: https://lnkd.in/ezt2Rb49

📣 The ECB has just launched a public consultation on its new draft guide on governance and risk culture.   Unsurprisingly, we see that governance continues to be at the top of the ECB's (and national authorities') agenda and that the way forward is to intensify supervision in this area: “banks need to continue enhancing their implementation of governance standards, while the ECB will continue to intensify its scrutiny in order to take timely action to bring about concrete improvements in this area and to escalate non-remediated supervisory findings whenever relevant”.   📑 This draft guide offers a practical tool for all banks to assess their own governance and risk culture, setting guidelines, lists of red flag situations and observed good practices on fundamental issues such as:   ✔ the role of the management body in its management and supervisory functions, ✔management body composition, including collective suitability and diversity, ✔independence and conflicts of interest, ✔committees’ composition and their interaction with the management body, ✔management body and committee documentation, ✔internal policies, ✔internal control functions, including their interplay with the management body in its supervisory function, performance assessment, remuneration, appointment, resources, staffing, roles, responsibilities and processes, ✔risk appetite framework and its implementation ✔supervisory approach   A must-read for those in the banking sector! https://lnkd.in/d-DtFf-V