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2016 – dismantling risk governance silos 

December 17, 2015

Brian Gregory, Banking Technology

If 2015 is to be remembered as the year regulators challenged boards to demonstrate their strong governance over their risk management, 2016 promises something just as important. In fact, 2016 will arguably be a truly momentous year in the world of non-financial risk as it could well become the year that risk governance silos are finally dismantled.

In July 2015, in perhaps the most memorable example of regulators challenging boards, the Basel Committee, revised its “Corporate governance principles for banks.” The major revised principles expand the guidance on the role of the board of directors in overseeing the implementation of effective risk management systems. They also emphasise the importance of the board’s collective competence as well as the obligation of individual board members to dedicate sufficient time to their mandates and to keep abreast of developments in banking.

Meanwhile, the principles strengthen the guidance on risk governance, including the risk management roles played by business units, risk management teams, and internal audit and control functions (the three lines of defence), as well as underline the importance of a sound risk culture to drive risk management within a bank. Read more

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