Meanwhile, banks’ executive management and risk management staff were in a weaker position to evaluate and control the operations of portfolio managers. Ratings assigned by rating agencies to exotic products were not called into question, despite the raters’ own agency problems. Supervisors were also less able to scrutinise bank balance sheets and understand the risks.
This function has the responsibility of ensuring compliance with legislative and regulatory requirements as well as policies and procedures. Moreover, a compliance certificate has to be delivered by the board to the central bank on an annual basis as we want to ensure that the board is assuming its compliance oversight responsibilities over the activities of the institution.