China Banking Regulatory Commission, Guidelines for the Comprehensive Management of Risks by Banking Financial Institutions

Matters for other financial institutions established with the approval of the banking regulator shall be handled with reference to these Guidelines (Article 53).

Main contents: The board of directors of a banking financial institution shall bear ultimate responsibility for comprehensive risk management (Article 11).

Banking financial institutions that are relatively large in scale or whose business is complex shall have a risk director (chief risk officer). A risk director (chief risk officer) or other senior officer with primary responsibility for comprehensive risk management shall maintain full independence, be independent from the lines of authority for operations and business, and may report on comprehensive risk management directly to the board of directors (Article 15).

Replacement of the risk director (chief risk officer) shall first require the approval of the board of directors and be disclosed. The banking financial institution shall report the reasons for the replacement of the risk director (chief risk officer) to the banking regulator.

A banking financial institution shall conduct an assessment of its risk preferences at least once a year (Article 21).

Risk preferences shall include the maximum level of the various risks that the banking financial institution is willing to bear. The quantitative indicators for risk preferences include the target values and target ranges for profit, risks, capital, liquidity and other relevant indicators. Capital and liquidity counter the level of overall risk and of various types of risks (Article 22).

Issued: September 27 2016

Effective: November 1 2016

Applicability: These Guidelines shall apply to banking financial institutions lawfully established in China.

For the purposes of these Guidelines, the term “banking financial institution” means a financial institution that takes deposits from the public, such as commercial banks and rural credit cooperatives, as well as policy banks and China Development Bank established in China (Article 2).

Matters for other financial institutions established with the approval of the banking regulator shall be handled with reference to these Guidelines (Article 53).

Main contents: The board of directors of a banking financial institution shall bear ultimate responsibility for comprehensive risk management (Article 11).

Banking financial institutions that are relatively large in scale or whose business is complex shall have a risk director (chief risk officer). A risk director (chief risk officer) or other senior officer with primary responsibility for comprehensive risk management shall maintain full independence, be independent from the lines of authority for operations and business, and may report on comprehensive risk management directly to the board of directors (Article 15).

Replacement of the risk director (chief risk officer) shall first require the approval of the board of directors and be disclosed. The banking financial institution shall report the reasons for the replacement of the risk director (chief risk officer) to the banking regulator.

A banking financial institution shall conduct an assessment of its risk preferences at least once a year (Article 21).

Risk preferences shall include the maximum level of the various risks that the banking financial institution is willing to bear. The quantitative indicators for risk preferences include the target values and target ranges for profit, risks, capital, liquidity and other relevant indicators. Capital and liquidity counter the level of overall risk and of various types of risks (Article 22).