1.A Bank must establish, implement and maintain a market risk governance framework, which enables it to identify, assess, monitor, mitigate and control market risk. The market risk framework consists of policies, processes, procedures, systems and controls.
2.The market risk governance framework must be documented and approved, maintained and overseen by the Board and must provide for a sound and well-defined framework to address the Bank’s market risks.
3.A Bank’s market risk management processes must be integrated with the Bank’s overall risk management processes. Banks that have trading books must develop separate and specific trading book policy statements and risk frameworks.
4.The Board and Senior Management must be actively involved in the market risk control process and must regard risk control as an essential aspect of the business to which significant resources need to be devoted. In this regard, the daily reports prepared by the market risk management function must be reviewed by a level of management with sufficient seniority and authority to enforce both reductions of positions taken by individual traders and reductions in the Bank’s overall risk exposure.