Discuss the role of the Board Risk Management Committee (BRMC) in managing the risks of a bank.
The BRMC sits at the top of the bank’s risk governance structure. Its job is to make sure risk management policies are not just written on paper; they are actually working.
Key Responsibilities of the BRMC
- Formulates and reviews (at least annually) risk management policies and strategies for sound risk management.
- Monitors implementation of risk management policies and processes to ensure effective prevention and control measures.
- Ensures the construction of an adequate organizational structure for managing risks within the bank.
- Supervises the activities of the Executive Risk Management Committee (ERMC).
- Ensures compliance with Bangladesh Bank (BB) instructions regarding the implementation of core risk management.
- Ensures formulation and review of risk appetite and limits, and recommends these to the Board of Directors for their review and approval.
- Approves adequate record-keeping and reporting systems and ensures their proper use.
- Holds at least 4 meetings in a year — preferably one meeting every quarter — and more if deemed necessary.
- Analyzes all existing and probable risk issues in meetings, takes appropriate decisions for risk mitigation, incorporates them in the meeting minutes, and ensures follow-up.
- Submits proposals, suggestions, and summaries of BRMC meetings to the Board of Directors at least on a quarterly basis.
- Complies with instructions issued from time to time by the regulatory body.
- Ensures appropriate knowledge, experience, and expertise of lower-level managers and staff involved in risk management.
- Ensures sufficient and efficient staff resources for RMD.
- Establishes standards of ethics and integrity for staff and enforces these standards.
- Assesses the overall effectiveness of risk management functions on a yearly basis.
Banks are encouraged to preserve video recordings of BRMC meetings for verification by Bangladesh Bank’s DOS team. The DOS team may also meet members of BRMC and ERMC from time to time to get a closer perspective of risk management culture and practice.
