№ 3/2017

Fìnansi Ukr. 2017 (3): 70–85https://doi.org/10.33763/finukr2017.03.070

MONETARY POLICY

BORTNIKOV Gennadiy ¹, LYUBICH Oleksandr ²

¹SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0001-8388-6721
²SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0002-9339-4242

Harmonization of the risk management mechanism of banks with international standards

The article states that the risk management system of banks according to modern standards should include all three lines of defense from risks. Authors suppose that additional and necessary level of protection should be a risk committee under the supervisory board of banks. The analysis shows that although large state-owned banks have improved the disclosure of information about the risk management system and the risks assumed, there is no clear position of management and supervisory boards on the acceptable level of risk appetite to all key financial risks. The authors emphasize the need to introduce a regulatory requirement to publish on an annual basis the results of regulatory stress testing of banks, to determine risk appetite in large Ukrainian banks, including state ones, and make it publicly available. It is found that target levels of solvency, liquidity and risk / return should be used as indicators of risk appetite, while state-owned banks should be leaders in the financial sector in disclosure of the risks introducing current risk culture. It is concluded that the system of remuneration in state banks requires regulation by the NBU in terms of the focus on the acceptable risk tolerance, separation of approaches to reward risk-takers and risk controllers.

Keywords:banks, banking, banking supervision, risk management, corporate governance.

JEL: G21, E52, E58.

Bortnikov G. . Harmonization of the risk management mechanism of banks with international standards / G. . Bortnikov, O. . Lyubich // Фінанси України. - 2017. - № 3. - C. 70-85.

Article original in Ukrainian (pp. 70 - 85)

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