of our effort to further strengthen the risk management
practices of financial institutions in Singapore,
MAS issued a set of guidelines on sound risk management
practices in February 2006. The guidelines emphasise
four key pillars of effective risk management:
||The role of a financial institution’s
board of directors in its oversight of risk
management policies and their implementation.
||The role of senior management in ensuring
that sound policies, effective procedures
and robust systems are in place.
||The presence of sound risk management processes
and operating procedures that integrate prudent
risk limits with appropriate risk measurement,
monitoring and reporting.
||The presence of competent personnel in
the risk management, control and audit functions.
These guidelines, together with our earlier guidance on Internet
Banking Technology Risk Management, Business Continuity Management
and Outsourcing, serve as a useful guide to financial institutions
seeking to enhance their risk management practices. While the guidelines
can be broadly applied, they are not intended to be exhaustive nor
do they prescribe a uniform set of risk management standards for
all financial institutions, especially given the diverse players
and wide-ranging activities in Singapore’s financial sector.
Financial institutions should implement
an appropriate risk management framework
based on the four key pillars, taking
into account the nature, size and
complexity of their operations. They
should regularly review their existing
practices, identify areas for improvement,
and implement the recommended practices
MAS will update the guidelines as
industry standards and practices
evolve, and as risk issues emerge.
We will be issuing more industry-specific
guidance, for example on the insurance
industry, in the near future.