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Basel Committee issues consultation on revised corporate governance principles for banks

  • Corporate Governance  Image

16 Oct 2014

The Basel Committee recently released proposed revised guidelines on corporate governance at banks for consultation. The proposed guidelines build on the Committee's 'Principles for enhancing corporate governance', published in 2010. Comments are due by 9 January 2015.

Effective corporate governance is critical to the proper functioning of a bank, the banking sector and the economy. The proposed guidelines:

  • strengthen the guidance on risk governance, including the risk management roles played by business units, risk management teams, and internal audit and control functions (the three lines of defence) and the importance of a sound risk culture to drive risk management within a bank;
  • expand the guidance on the role of the board of directors in overseeing the implementation of effective risk management systems;
  • emphasise the importance of the board's collective competence as well as the obligation on individual board members to dedicate sufficient time to their mandates and to remain current on developments in banking;
  • provide guidance for bank supervisors in evaluating the processes used by banks to select board members and senior management; and
  • recognise that compensation systems form a key component of the governance and incentive structure through which the board and senior management of a bank convey acceptable risk-taking behaviour and reinforce the bank's operating and risk culture.

The press release and proposed guidelines are available from the website of the Bank for International Settlements.

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