I realize this point may seem at odds with what I just said about parochial motivations…. But having solid governance structures in the banks would precisely help the institution veer away from such insular thinking. Governance was never meant to be the reactive function of the regulator.
In mid-2014, we published a Discussion Paper to generate debate with stakeholders on risk appetite, its link with strategy and its importance for financial institutions. The Discussion Paper considered the main concepts and theories relating to risk appetite and its place within a risk appetite framework. It also provided suggestions as to what a risk appetite statement should contain.