The Central Bank seeks to promote the effective and efficient development and functioning of the banking system. To this end, banks are required to have a comprehensive approach to risk management, including Board and Senior Management oversight, to ensure their resiliency and enhance overall financial stability.

Risk management, together with internal audit and compliance, comprise key control functions in a bank. The control functions have a responsibility, independent of the management of the bank’s business lines, to provide objective assessment, reporting and/or assurance. The control functions are an essential foundation for effective corporate governance, which is the set of relationships between the bank’s management, board, shareholders and other stakeholders. Collectively these comprise the structure through which the objectives of the bank are set, the means of attaining those established objectives and the monitoring of performance against the established objectives.

In introducing this Regulation and the accompanying Standards, the Central Bank intends to ensure that banks’ approaches to risk management are in line with leading international practices.

This Regulation and the accompanying Standards establish an overarching prudential framework for risk management. Standards and supervisory expectations for selected specific risks are, or will be, established in other Central Bank regulations.

This Regulation and the accompanying Standards are issued pursuant to the powers vested in the Central Bank under the Central Bank Law.

Where this Regulation, or the accompanying Standards, include a requirement to provide information or to take certain measures, or to address certain items listed at a minimum, the Central Bank may impose requirements, which are additional to the list provided in the relevant article.