ECB to improve RDARR processes

🏦 ECB consults on governance and risk culture The European Central Bank (ECB) has launched a public consultation on its new draft Guide on governance and risk culture, inviting feedback from banks and stakeholders until October 16, 2024. This initiative aims to replace the 2016 supervisory statement and outlines updated expectations for banks' internal governance. Key highlights include: - Focus on Diversity and Effectiveness: The Guide emphasizes the need for diverse and effective management bodies, a priority for the Single Supervisory Mechanism (SSM). - Clarified Expectations: It details how management bodies should operate, the roles of internal control functions, and the importance of a robust risk culture. - Practical Reference: The Guide serves as a roadmap for banks, incorporating recent updates from the European Banking Authority and examples of best practices. - Ongoing Scrutiny: The ECB will intensify its oversight to ensure banks implement necessary governance improvements, particularly in light of past financial crises. A stakeholder meeting is scheduled for September 26, 2024, to discuss these developments further. This consultation marks a significant step towards strengthening governance standards in the European banking sector. Link - https://lnkd.in/gbZfJe4u #riskspotlight #operationalrisk #operationalriskmanagement #riskculture #riskgovernance #riskmanagement

📢 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 European Central Bank (ECB) recently published a draft guide highlighting the crucial role of good governance and risk culture for EU banks. This guidance is essential for maintaining the stability of the financial system and public trust. Poor governance and risk culture can lead to detrimental decision-making and excessive risk-taking, potentially jeopardizing a bank's capital and operational resilience. The ECB's guide outlines key supervisory expectations, focusing on four dimensions of risk culture: leadership tone from the top, effective communication, diversity and challenge, accountability for risks, and appropriate incentives. Key Implications for Banks: 1. Enhanced Governance Frameworks: Banks must implement strong governance structures, clear organizational roles, effective risk management processes, and robust control mechanisms. 2. Strong Risk Culture: A culture of prudent risk-taking should be fostered, with leadership promoting open communication and accountability. Employees must understand and adhere to risk management principles. 3. Risk-Aligned Incentives:Compensation and incentive structures should align with the bank's long-term goals and risk profile, discouraging excessive risk-taking. 4. Regulatory Compliance: Banks are required to comply with EU regulations and guidelines on governance and risk culture, including those from the EBA and ECB. 5. Supervisory Scrutiny:The ECB will closely monitor banks' adherence to these guidelines. Banks need to be prepared to demonstrate compliance and address any identified issues. #Banking #FinancialStability #Governance #RiskManagement #ECB

The European Central Bank's Draft Guide on Governance and Risk Culture aims to demonstrate that effective governance and a robust risk culture are fundamental to the success of any organisation, influencing its structural integrity, cultural dynamics and personnel management. In the banking sector, establishing a cohesive organisational framework and a well-defined management body, along with clear values, norms and behavioural expectations, is critical for ensuring operational soundness, strategic planning and informed decision-making. Enhanced strategic steering capabilities are particularly vital in navigating the challenges presented by the continually evolving financial landscape, allowing banks to remain resilient and adaptive. Related link: Draft guide on governance and risk culture - https://lnkd.in/eqSJMRxD Kashnie Naidoo Charlotte Gamede Krishna Govender

Systemic Risk at the European Central Bank and Bank of England: A Comparative Analysis In the introductory post of this series, I promised to examine and compare systemic risk management approaches across central banks worldwide. Today, let's take a closer look at two prominent institutions in Europe: the European Central Bank (ECB) and the Bank of England (BoE). The ECB, responsible for monetary policy in 19 eurozone countries, has adopted a multi-layered, preventive approach to systemic risk management. This involves prudential supervision of large banks, regular stress tests, and the use of macroprudential tools to address emerging vulnerabilities. The ECB also emphasizes cooperation and coordination with national authorities and other EU institutions. On the other hand, the BoE is tasked with maintaining financial stability in UK markets. Its policy framework focuses on identifying and assessing systemic risks through extensive data analysis, close supervision of systemic institutions, and the use of policy tools to boost resilience and limit the impact of potential shocks. The BoE is enhancing its risk management framework in response to Brexit challenges. Both institutions share clear similarities in their commitment to preserving financial stability, emphasis on preventive oversight, and use of targeted policy tools. However, differences also exist in how they navigate their unique institutional contexts and specific policy priorities. Overall, both the ECB and BoE have developed comprehensive frameworks for managing systemic risk that are adaptable to today's dynamic environment. Yet, these frameworks must continually evolve as new risks emerge and economic conditions change. What do you think? What is your experience with risk appetite and policymaking approaches by the ECB and BoE? What policy lessons can we draw from comparing their activities? Share your thoughts in the comments section. Stay tuned, as I will present more comparative studies on systemic risk management approaches at other prominent central banks worldwide. By following this page, you'll stay informed about new analyses and regular updates. #EuropeanCentralBank #BankofEngland #SystemicRisk #RiskManagement #MacroprudentialPolicy #FinancialStability #Brexit #PolicyFrameworks #ComparativeAnalysis #CentralBanking

The ECB has published its 2025 – 2027 supervisory priorities, calling on banks to focus on resilience to macro-financial risks and severe geopolitical shocks, tackling governance (incl. RDARR expectations) and climate-related shortcomings, and driving digital strategies to address emerging challenges. This includes sharpening risk management frameworks, aligning with supervisory standards on climate risk, and adapting to new technologies. Explore KPMG’s latest insights on the ECB’s supervisory priority areas for 2025 – 2027 and crucial recommendations for banks to consider: https://shorturl.at/Ilhp4 #SSM #ECB #BankingSupervision

The ECB has published its 2025 – 2027 supervisory priorities, calling on banks to focus on resilience to macro-financial risks and severe geopolitical shocks, tackling governance and climate-related shortcomings, and driving digital strategies to address emerging challenges. This includes sharpening risk management frameworks, aligning with supervisory standards on climate risk, and adapting to new technologies. Explore KPMG’s latest insights on the ECB’s supervisory priority areas for 2025 – 2027 and crucial recommendations for banks to consider: https://shorturl.at/Ilhp4 #SSM #ECB #BankingSupervision

On May 3 2024, the European Central Bank (#ECB) published its final guide on risk data aggregation and risk reporting (#RDARR). 🛡️ Join Deloitte experts Andris Liepins, Dagnija Bērziņa and Elena Grigore this Wednesday, 12 June at 11 AM 📅 to explore the core principles and requirements of the guide. 🔗 Sign up now to learn practical strategies for maintaining compliance and enhancing your risk data management: https://deloi.tt/4arULAs. #Deloitte #RiskAdvisory #RiskManagement #banking #webinar

The European Central Bank (ECB) has published a guide emphasizing the importance of good governance and risk culture for banks in the EU. This is crucial for maintaining the financial system's stability and public trust. Deficiencies in governance and risk culture can lead to poor decision-making and excessive risk-taking, potentially threatening a bank's capital and operational resilience. The ECB guide outlines key supervisory expectations when assessing governance and risk culture, highlighting four dimensions of risk culture: tone from the top and leadership, a culture of effective communication, challenge diversity, accountability for risks, and appropriate incentives. Firm Implications: Enhanced Governance Frameworks: Banks must establish robust governance arrangements, including clear organizational structures, well-defined responsibilities, effective risk management processes, and control mechanisms. Strong Risk Culture: Banks should foster a culture of prudent risk-taking through solid leadership, open communication, and a focus on accountability. They must ensure that employees understand and adhere to risk management principles. Risk-Aligned Incentives: Remuneration and incentive structures should be aligned with the bank's long-term interests and risk profile, discouraging excessive risk-taking. Regulatory Compliance: Banks must comply with EU regulations and guidelines on governance and risk culture, including those issued by the EBA and the ECB. Supervisory Scrutiny: The ECB will increasingly scrutinize banks' governance and risk culture practices. Banks should be prepared to demonstrate their adherence to the guidelines and address any identified weaknesses. Proportionality: While the guidelines apply to all banks, the specific governance arrangements and mechanisms should be proportionate to the nature, scale, and complexity of the bank's activities and risks. The ECB guide aims to promote a more sustainable banking sector by ensuring banks have strong internal governance and a sound risk culture. This will contribute to financial stability and public confidence in the banking system. #ECBBankingSupervision #GovernanceAndRiskCulture #BankingRegulation #RiskManagement #FinancialStability #EUGovernance #BankingIndustry #Compliance #CorporateGovernance

The ECB has published its 2025-2027 supervisory priorities, calling on banks to focus on resilience to macro-financial risks and severe geopolitical shocks, tackling governance and climate-related shortcomings, and driving digital strategies to address emerging challenges. This includes sharpening risk management frameworks, aligning with supervisory standards on climate risk, and adapting to new technologies. Explore KPMG’s latest insights on the ECB’s supervisory priority areas for 2025-2027 and crucial recommendations for banks to consider: https://shorturl.at/Ilhp4 #SSM #ECB #BankingSupervision