Table of Contents
Document Overview
Principle 8 - Supervisory approach (paras. 40.18-40.19) (effective as of 25 April 2024)
40.18 Principle 8: [Reference documents: BCBS, High-level considerations on proportionality, July 2022; BCBS, Principles for the effective management and supervision of climate-related financial risks, June 2022; BCBS, Frameworks for early supervisory intervention, March 2018; BCBS, Sound Practices: implications of fintech developments for banks and bank supervisors, February 2018; BCBS, Guidelines for identifying and dealing with weak banks, July 2015; SRP10, SRP20, SCO50.] An effective system of banking supervision requires the supervisor to develop and maintain a forward-looking assessment of the risk profile of individual banks, proportionate to their systemic importance; identify, assess and address risks emanating from banks and the banking system as a whole; have a framework in place for early intervention; and have plans in place, in partnership with other relevant authorities, to take action to resolve banks in an orderly manner if they become non-viable.
40.19 Essential criteria:
(1) The supervisor uses a well defined methodology and processes to determine and assess on an ongoing basis the nature, impact and scope of the risks which banks:
(a) are exposed to; and
(b) present to the safety and soundness of the banking system (including implications for and interlinkages with financial system stability).