FSB: Principles for an effective risk appetite framework - finalised document/Guidance on supervisory interaction with financial institutions on risk culture

The principles were issued for public consultation in July 2013 and have been revised in light of the comments received during that consultation. It is noted that respondents generally supported them, but sought more clarity on the extent to which a financial institution's risk appetite should be cascaded to inpidual legal entities and business units (responses to the consultation can be downloaded inpidually via the second link below). FSB is inviting comments on the risk culture paper in order to assist supervisors in assessing the risk culture at financial institutions. It identifies the foundational elements that contribute to the promotion of a sound risk culture within a financial institution and notes that it does not offer a definition of a “good” or “bad” culture, but provides guidance for supervisors to assess the strength and effectiveness of a financial institution’s culture in managing risk. Responses are required by 31 January 2014.