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  • Bank-wide Risk Management Framework

    • HC-6.6.1

      Conventional bank licensees must establish a sound risk management framework commensurate with the bank's size, complexity and risk profile. A risk management framework must have the following key features:

      (a) active Board and senior management oversight;
      (b) independent risk management function;
      (c) a Board driven sound risk management culture that is established throughout the bank;
      (d) appropriate policy, procedures and limits;
      (e) comprehensive and timely identification, measurement, mitigation, controlling, monitoring and reporting of risks;
      (f) appropriate management information systems ('MIS') at a business and bank-wide level; and
      (g) comprehensive internal controls.
      Added: July 2018

    • HC-6.6.2

      More specifically, the risk management framework generally encompasses the process of:

      (a) developing and implementing the enterprise-wide risk governance framework, subject to the review and approval of the board, which includes the bank's risk culture, risk appetite and risk limits;
      (b) identifying key risks to the bank including material individual, aggregate and emerging risks;
      (c) assessing the key risks and measuring the bank's exposures to them;
      (d) ongoing monitoring and assessing of the risk taking activities, decisions and risk exposures in line with the board-approved risk strategy, risk appetite, risk limits and determining the corresponding capital or liquidity needs (i.e. capital planning) on an ongoing basis;
      (e) reporting to senior management, and the board or risk committee as appropriate, on all the items noted in this Paragraph including but not limited to proposing appropriate risk-mitigating actions;
      (f) establishing an early warning or trigger system for breaches of the bank's risk appetite or limits; and
      (g) influencing and, when necessary, challenging decisions that give rise to material risk.
      Added: July 2018

    • HC-6.6.2A

      Further to the requirement in Paragraph HC-B.1.2, branches of foreign bank licensees must demonstrate that the activities of the Bahrain branch are subject to appropriate risk management oversight commensurate with the size, complexity, nature and the risk profile of the branch.

      Added: October 2019

    • HC-6.6.3

      Senior management must establish a risk management process that is not limited to credit, market, Interest rate risk in the banking book (IRRBB), liquidity and operational risks, but which incorporates all material risks. This includes reputational and strategic risks, as well as risks that do not appear to be significant in isolation, but when combined with other risks, could lead to material losses.

      Added: July 2018