BOG Revises Risk Management Directive, Proposes Governance Directive
The Bank of Ghana (BOG) published the revised Risk Management Directive and an exposure draft for the Corporate Governance Disclosure Directive. The Risk Management Directive aims to ensure that regulated financial institutions have the requisite systems to adequately identify, measure, evaluate, control, mitigate, and report material risks that may affect their ability to meet their obligations to depositors and other stakeholders. BOG also published explanatory notes to clarify the important amendments to the Directive as a result of the response to the consultation on the Directive.
The Directive has been issued pursuant to Section 92(1) of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) and shall apply to banks, savings and loans companies, finance houses, and financial holding companies licensed or registered under Act 930. The Directive stipulates that as part of the risk management strategy, in defining the Risk Universe, the Board shall at a minimum consider the extent to which these listed risks shall be addressed: credit risk, market risk, liquidity risk, operational risk, information communication technology (ICT) risk, cyber-security risk, reputational risk, systemic risk, compliance risk, concentration risk, country and transfer risk, and money laundering/financing of terrorism risk (risks as defined by the Basel Committee on Banking Supervision). The key requirements of this directive are that a regulated financial institution shall:
- Develop and maintain a risk management framework that is appropriate to the size, business mix, and complexity of the institution and relevant at all times
- Maintain a Board-approved risk appetite statement
- Maintain a Board-approved risk management strategy that describes the key elements of the risk management framework that give effect to the approach to managing risk
- Maintain adequate resources to ensure compliance with this directive
- Notify BOG when it becomes aware of a significant breach of, or material deviation from, the risk management framework; or that the risk management framework does not adequately address a material risk
The exposure draft of the Corporate Governance Disclosure Directive sets out disclosure requirements for governance structure, remuneration policies, Board meetings, other engagement of Directors, succession planning, ethics and professionalism, related party transactions, and data protection. As per the exposure draft, within 90 days of the beginning of each financial year, the Board shall provide a certification in the annual report as to the compliance of the regulated financial institution or otherwise with the contents of the Directive. The Board shall report any material deficiencies and weaknesses that have been identified in the course of the year, along with action plans and timetables for corrective action by the Board to BOG. The Directive will be issued under the powers conferred by Sections 56 and 92(1) of the Act 930 and shall apply to regulated financial institutions. BOG welcomes comments on all aspects of this exposure draft.
Related Links
- Notification on Risk Management Directive
- Risk Management Directive (PDF)
- Explanatory Notes on Risk Management Directive
- Notification on Draft Corporate Governance Disclosure Directive
- Exposure Draft (PDF)
- Request for Comments on Exposure Draft
Keywords: Middle East and Africa, Ghana, Banking, Disclosures, Governance, Basel, Risk Appetite, Risk Management Directive, Corporate Governance Disclosure Directive, BOG
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
EBA Publishes Single Rulebook Q&A Updates in November 2021Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.