The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups. These are the good practices that have helped crisis management groups to enhance preparedness for the management and resolution of a cross-border financial crisis affecting a global systemically important bank (G-SIB). While many of these practices have been well-established, others are emerging or developing. The good practices identified in the report relate to the structure and operation of crisis management groups, resolution policy, strategy, and resolvability assessments; coordination on enhancing the resolvability of a firm; and enhancing home-host coordination arrangements for crisis preparedness.
The crisis management groups bring together the home and key host authorities that have a role in the resolution of a systemically important financial institution. The report provides a reference for home and host authorities in crisis management groups to help them enhance their crisis management preparedness. It draws on a 2020 stock-take exercise on how G-SIB home and host authorities use and operate crisis management groups as well as on the experience of members of crisis management groups during the COVID-19 pandemic. The focus is on activities of crisis management groups that seek to enhance crisis preparedness rather than on cooperation during a crisis. The good practices identified in this report are organized along 16 desired outcomes that crisis management groups seek to achieve, including the following:
- The structure and operation of crisis management groups. Crisis management group membership and structures reflect the specificities of the firm, its business model, and geographic footprint. The crisis management group is underpinned by an institution-specific cooperation agreement that facilitates the necessary crisis management planning, and cooperation, between the relevant authorities.
- Resolution policy, strategy, and resolvability assessments. The members of a crisis management group are kept informed of firm-specific and regulatory resolution planning related developments in relevant home and host jurisdictions. The members also review the resolution strategy and operational resolution plan annually or when there are material changes to a firm’s business or structure. The crisis management group serves as a forum for coordinating resolvability assessments, sharing findings, discussing any remaining barriers to resolvability, and plans to removing these barriers. The crisis management group also serves as a forum for the firm to present its progress on resolvability and for the members to ask questions to facilitate their review and monitoring.
- Coordination on enhancing the resolvability of a firm. The members of crisis management group review a firm’s capabilities to support resolution, with a view to obtaining comfort over their operationalization and reliability at the group and local levels. The members also have a clear understanding of the needed data to inform the decisions of authorities in a crisis and in resolution. Additionally, the members coordinate expectations for, and feedback to, the firm on its resolution capabilities and progress toward resolvability.
- Enhancement of home-host coordination arrangements for crisis preparedness. The members have a clear understanding of each other's internal decision-making and execution processes. Also, the members and their representatives maintain strong working relationships to support effective coordination in a crisis. Communications between representatives beyond formal meetings, such as bilateral meetings, workshops, or calls, have helped to strengthen interpersonal relationships.
As crisis management groups continue to evolve in performing their activities, FSB will continue to monitor the development of their practices and consider any future work to promote consistency and effective operation of crisis management groups.
Keywords: International, Banking, Insurance, Crisis Management, G-SIB, Good Practices, Resolution Framework, Resolvability Assessment, Operational Risk, Governance, FSB
Previous ArticleOSFI Updates Timeline for Implementation of Certain Basel Rules
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.