BCBS updates principles for the management of credit risk

The Basel Committee on Banking Supervision (BCBS) has published a revised version of its principles for the management of credit risk, which serve as guidelines for banking supervisory authorities to assess banks' credit risk management processes. The updated principles, published alongside a press release, reaffirm the guidelines first established in 2000 while making limited technical amendments to align with the current Basel Framework and recent Committee guidance. The principles focus on four key areas: (i) establishing a suitable credit risk environment; (ii) operating under a sound credit-granting process; (iii) maintaining an appropriate credit administration, measurement and monitoring process; and (iv) ensuring adequate controls over credit risk. The update to the guidelines follows a review mandated by BCBS in July 2023, confirming the ongoing relevance of the credit risk principles, and incorporates feedback from a consultation held earlier this year (for background, please see our update). The update is not intended to change the content of the principles or cover new topics.

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