The European Central Bank (ECB) today launched a public consultation on its new draft Guide on governance and risk culture.
The Guide reflects the ECB’s focus on diverse and effective management bodies, which is a supervisory priority of the Single Supervisory Mechanism (SSM) and sets out supervisory expectations regarding the governance and risk culture of supervised banks.
The Guide, which replaces the 2016 SSM supervisory statement on governance and risk appetite, provides banks with a roadmap to a more effective internal governance and risk culture.
In particular, the Guide clarifies supervisors’ expectations regarding how management bodies and committees should be composed and function, spells out the roles and responsibilities of the internal control functions, emphasises the importance of risk culture and outlines expectations regarding the risk appetite frameworks of banks.