Belarus – Central bank issues instruction requiring banks and financial institutions to create independent in-house risk management systems

On 8 December the website Pravo.by, the official Internet portal of the Republic of Belarus for legal acts, published a resolution of the National Bank of the Republic of Belarus that will require banks, non-bank financial institutions, banking groups, and bank holding companies to implement risk-management systems beginning in 2013.  The resolution, passed by the National Bank on 29 October and entered in the national register on 6 December, will enter into effect on 22 January 2013.

The resolution itself is extremely brief, and simply promulgates an attached Instruction that is 17 pages in length.  The Instruction consists of 4 chapters (38 articles in total) and an appended table outlining 13 main categories of operational risks and the types of operational incidents that can give rise to them.

The Instruction requires the board of directors of the bank or financial institution to organize an in-house risk management system (система управления рисками); the system is to be provided with personnel, computing resources, and funds adequate for it to be able to assess the institution’s capital adequacy position, assess risk tolerances, and conduct stress testing.  As part of the risk management system, the board of directors is required to institute a risk committee (комитет по рискам), to define its powers, and to staff it with an independent director: although the committee is to report regularly to the board of directors it is required to operate independently of the board.

Sources:

Об утверждении Инструкции об организации системы управления рисками в банках, небанковских кредитно-финансовых организациях, банковских группах и банковских холдингах (2012-12-08)

Белорусские банки в 2013 году обяжут создавать комитет по рискам во главе с независимым директором (2012-12-10 15:57)

Mark Pleas

Eastern Europe Banking & Deposits Consultant

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