40.39 Principle 17: [Reference documents: BCBS, High-level considerations on proportionality, July 2022; BCBS, Guidance on credit risk and accounting for expected credit losses, December 2015; FSB, Principles for sound residential mortgage underwriting practices, April 2012; CRE20, CRE40, CRE45, CRE50, CRE51, CRE54, MGN10, MGN20.] The supervisor determines that banks have an adequate credit risk management process that considers their risk appetite, risk profile, market conditions, macroeconomic factors and forward-looking information. This includes prudent policies and processes to identify, measure, evaluate, monitor, report and control or mitigate credit risk [Credit risk may result from: on-balance sheet and off-balance sheet exposures, including loans and advances; investments; interbank lending; derivative transactions; securities financing transactions; and trading activities.] (including counterparty credit risk [Transactions that give rise to counterparty credit risk include: OTC derivatives, exchange-traded derivatives, long settlement transactions and securities financing transactions that are bilaterally or centrally cleared. Counterparty credit risk may result from (but is not limited to) transactions with banks, non-financial corporates and non-bank financial institutions.]) on a timely basis.