What are the core risks of a bank according to the guidelines issued by Bangladesh Bank?
Bangladesh Bank has issued guidelines covering six core risk areas that every bank must manage. These guidelines collectively form the regulatory framework for risk management in Bangladesh’s banking sector.
The six core risk management guidelines issued by Bangladesh Bank are:
- Credit Risk Management (CRM): guidelines on identifying, measuring, monitoring, and controlling credit risk from loans, advances, and off-balance sheet exposures.
- Asset-Liability Risk Management (ALRM): guidelines on managing balance sheet risk — covering liquidity risk, interest rate risk, LCR, NSFR, ADR, leverage ratio, and the ALCO framework.
- Foreign Exchange Risk Management (FXRM): guidelines on managing exchange rate risk, treasury operations (front, mid, and back office), derivatives, and AML/CFT in foreign exchange.
- Anti-Money Laundering (AML) Risk Management: guidelines on KYC, CDD, CTR, STR, e-KYC, customer due diligence, and prevention of terrorist financing.
- Internal Control and Compliance (ICC) Risk Management: guidelines on internal control systems, audit and inspection, monitoring, and compliance functions.
- Environmental and Social Risk Management (ESRM): guidelines requiring banks to assess and manage environmental and social risks in their lending and financing decisions.
Bangladesh Bank has also issued a Guideline on ICT Security Risk Management — covering cybersecurity, data protection, system availability, and disaster recovery for banks and NBFIs.
