Bangladesh banks tighten risk management
Risk management procedures for financial institutions vary from country to country… and are often thought to be less stringent in areas of the world where the economy is not as strong. Such is the case with Bangladesh, but that is quickly changing.
Earlier this week, the Bangladesh Bank announced it was asking all commercial banks to institute new procedures to strengthen risk management across the board. This includes various steps for the identification, measurement, monitoring and control or mitigation of various existing and potential risks. Banks face penalties if they fail to follow the central bank’s guidelines, which ordered each financial institution to appoint a Chief Risk Officer and to appoint someone at the vice president level or higher as the head of the risk management division.
These recommendations will require financial institutions to change the way they assess and verify clients and how they monitor their transactions. While it will help Bangladesh meet its international obligations as part of a worldwide effort to control money laundering, it comes with increased costs and the difficulty of determining the best technological solution.
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