Getting Risk Governance Right

Thomas Huertas ()
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Thomas Huertas: EY LLP, Postal: 1 More London Place, London SE1 2AF, United Kingdom, http://www.ey.com/

Journal of Financial Perspectives, 2013, vol. 1, issue 1, 75-83

Abstract: This paper sets out the criteria that boards and supervisors should use to determine whether banks are governing risk correctly. First, boards have to set an overall risk target consistent with the overall return target. Second, the bank’s business model has to set a risk capacity and risk appetite that can enable the bank to meet its target for risk and return. Finally, the bank has to ensure that its three lines of defense (management, risk management and compliance, and internal audit) function well, both singly and in combination.

Keywords: Risk; Regulation; Risk Governance; Banks; Risk Targets; Risk Capacity; Compliance (search for similar items in EconPapers)
JEL-codes: G21 G28 G30 G32 G38 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jofipe:0010

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