MAS Issues Guidelines on Sound Risk Management Practices
Singapore, 27 Feb 2006...The Monetary Authority of Singapore (MAS) today issued guidelines that aim to provide financial institutions with guidance on sound risk management practices.
2. The risk management guidelines emphasise four key pillars of effective risk management:
(i) the role of a financial institution's board of directors in its oversight of risk management policies and their implementation;
(ii) the role of senior management in ensuring that sound policies, effective procedures and robust systems are in place;
(iii) the presence of sound risk management processes and operating procedures that integrate prudent risk limits with appropriate risk measurement, monitoring and reporting; and
(iv) the presence of competent personnel in the risk management, control and audit functions.
3. The guidelines, which capture sound industry practices globally, are not intended to be exhaustive or to prescribe a uniform set of risk management requirements for all financial institutions. Financial institutions should implement a risk management framework which is commensurate with the nature, size and complexity of their operations.
4. Ms Teo Swee Lian, Deputy Managing Director, Prudential Supervision said, "Strong risk management culture at all levels of the organisation and clear oversight by board and senior management in implementing effective systems and processes are crucial factors in an effective risk management framework for any financial institution. By issuing these guidelines for financial institutions to draw from, MAS aims to strengthen risk management in the financial sector."
5. MAS encourages financial institutions to review and implement the sound practices recommended in the guidelines where appropriate. The guidelines will be updated periodically as industry standards and practices evolve, and risk issues emerge.
6. MAS intends to issue more guidelines for specific industries such as insurance and capital markets.