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Financial Management and Analysis of Projects :
6. Financial Institutions :
6.4. Assessing FI Performance
6.4.6. Specialized FI Internal Controls
6.4.6.1. Internal controls for FIs:
- Should
comprise a set of rules and procedures designed to provide qualitative
standards that are complimentary to the quantitative analysis
of risk
- Are
becoming increasingly employed by banks and securities institutions
- Should
be used to internally manage operational risk, agency risk, and
legal risk
- Should
be exercised by independent control unit reporting to the Board,
and having no operating linkage with trading activities that create
risk
6.4.6.2.
The objective is to enhance risk management
culture in organization, including by:
- Requiring transparency of reports and documentation of the risk control
process;
- Monitoring the content and the efficiency of the vertical and horizontal
information flows
- Monitoring and reporting on accountability;
- Ensuring remuneration policy rewards efficient risk management through
high returns and minimum risk;
- Monitoring observance of trading limits and market procedures;
- Establishing rules for dealing with changes in volatilities;
- Testing the soundness of models;
- Examining the quality and uniformity of data input
- Validating and back-testing procedures
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6.4.5. Determining FI Credit Ratings | Next
6.5. Appraisal Checklist |
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