Risk management in Banks

How many Banks in Sri Lanka have a Board of directors that understand Risk Management? How will they monitor their organizations’ risk-taking activities? Can they understand the level of compliance with the Integrated risk management framework?

Directors have the fundamental responsibility to learn about the risks that banks are exposed to and to ensure that these risks are well managed. This is key for good corporate governance. Banks must ensure the safety of the deposits entrusted to them by the public and having a board directors who are keen on preventing excessive risk taking will help banks prevent crisis situations caused by careless investment decisions. Therefore, they should be appropriately equipped to make such decisions by understanding how the Bank manages it’s risk and whether they walk the talk when they do fancy presentations to the board.

About surenraj

“Views expressed are my own”
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One Response to Risk management in Banks

  1. surenraj says:

    European Commission’s impact assessment comments on CRD IV..
    .” In many cases, Board were either unable or reluctant to challenge executive management on their strategic business decisions. This was often the result of insufficient time commitment and inadequate technical knowledge on the Boards of credit institutions. In some cases, management dominance and insufficient diversity In the Boards composition undermined the objectivity of the Boards.
    In addition, Boards were not sufficiently involved in the Risk strategy, and as a result, executive management’s strategic approach to risk was not monitored, excessive risk taking incentives were established and proper systems to Implement effective risk management were not implemented”.

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