A Bank’s risk governance framework must include policies and procedures for the identification, measurement, monitoring and reporting on country and transfer risk in the Bank’s international funding, lending and investments on a timely basis.
The risk governance framework must provide a bank-wide, or if applicable, group-wide view of country and transfer risks, including, where relevant, intra-group exposures.
For Banks with material exposure to country and transfer risks, the risk governance framework must, at minimum, provide for the following items:
Country and transfer risk limits established in the board-approved risk appetite statement;
Documentation of the roles and responsibilities of the different parts of the Bank involved in managing country and transfer risk;
Definition of material country and transfer risks taking into account the size and nature of cross-border exposures relative to the total business of the Bank;
Policies and procedures to ensure that all material country and transfer risks are identified, measured, managed, mitigated and reported upon in a timely and comprehensive manner;
Policies and procedures to ensure that developments affecting country and transfer risks are monitored, and where required, appropriate countermeasures such as reducing exposure limits or other techniques are employed; and
Policies and procedures to ensure that provisioning reflects prudent minimums based on internal standards for exposure to each relevant country or through explicit consideration of country and transfer risk in the provisioning for individual exposures.