EBA欧洲银行-FeedbackdocumentonCP24_13页_221kb

CEBS High-Level Principles for Risk Management Consultation Feedback Summary

Core Content

The document outlines the feedback received from respondents on CEBS's consultation paper titled "High level principles for risk management (CP 24)" and summarizes the changes made to the guidelines based on these comments. The consultation period ran from April 8, 2009, to July 10, 2009, and nine written responses were received, although only eight were considered due to a late submission. The feedback indicates general support for the guidelines, with some suggestions for clarification and expansion.

Main Points and Suggestions

1. Scope and Purpose of the Guidelines

• Respondents acknowledged that the High-Level Principles were not intended to be a comprehensive set of guidelines but rather a foundational framework.
• There was a suggestion to clarify that the guidelines apply to relevant and material risks, not all risks.
• CEBS responded by emphasizing that the principles are designed to be flexible and that more detailed guidelines will be developed in the future, particularly by the EBA.

2. Proportionality and Risk Culture

• The principle of proportionality was widely accepted and considered important for flexibility in implementation.
• Some respondents felt that the term "risk culture" was too abstract and should not be treated as a principle, as it is a result of governance and reporting processes.
• CEBS clarified that the guidelines aim to foster a risk culture and provide sufficient detail for supervisors to assess its implementation.

3. Risk Appetite and Tolerance

• There was a call for more clarity between risk appetite and risk tolerance, with a suggestion to differentiate between risks that are actively taken and those that are managed.
• CEBS maintained the distinction, stating that both types of risk must be considered when setting risk appetite or tolerance.
• The guidelines were amended to remove duplication and clarify the setting and communication of risk tolerances.

4. Role of the Chief Risk Officer (CRO)

• Respondents suggested that the CRO should have a leading role in ensuring risk understanding throughout the organization.
• Some called for more detail on when a CRO is necessary, but CEBS stated that the High-Level Principles were not intended to be overly detailed at this stage.
• The language in paragraphs 20 and 21 was adjusted to be gender neutral.

5. Risk Models and Integration

• There was concern that the guidelines did not cover non-financial risks such as reputational and information security risks.
• CEBS acknowledged that these risks are relevant and may be included in future detailed guidelines.
• Suggestions to reorganize risk model-related content were considered, but the current structure was deemed appropriate.

6. Implementation and Communication

• Respondents emphasized the need for detailed implementation guidance and more concrete requirements.
• They suggested that the management body should have a full understanding of the institution’s business and associated risks.
• CEBS clarified that while the management body collectively must understand the nature of the business, individual members should have a level of understanding commensurate with their responsibilities.

7. New Product Approval

• There was a suggestion to consolidate paragraphs related to new product approval, with some advocating for the deletion of paragraph 35.
• CEBS maintained the current structure, emphasizing the importance of granularity in understanding the different aspects of new product approval and the necessity of involving the risk management function in the process.

Key Changes Made

• Paragraph 10 was amended to clarify that the management body collectively must have a full understanding of the institution’s risks.
• Paragraphs 11, 27, and 32 were updated to include the term "relevant" in the context of risk.
• Paragraph 11 was revised and a new paragraph 13 was added to emphasize the need for documented and updated governance arrangements.
• Paragraphs 13 and 15 were amended to remove duplication and clarify the setting and communication of risk tolerances.
• Paragraph 17 was revised to clarify the responsibilities of the management body in setting risk tolerance.
• Paragraph 29 was adjusted to ensure the integrated treatment of risk applies to both new and existing products.
• Paragraph 32 was modified to replace "on a consolidated basis" with "on a common basis" to avoid confusion.
• New paragraph 13 was added to include the requirement for independent audits of the risk management framework.

Conclusion

CEBS received constructive feedback on its consultation paper, which led to several amendments and clarifications. The revised High-Level Principles aim to provide a flexible and comprehensive framework, while acknowledging the need for future detailed guidelines. The emphasis on proportionality, governance, and communication remains central to the updated principles, ensuring they are practical and adaptable to different institutional needs.