In a circular issued late last month, Bangladesh Bank directed all banks to prepare for a new risk-based supervisory framework with an enhanced focus on culture and governance.
“Risk Based Supervision (RBS), in contrast to the traditional compliance-based supervision, adopts a forward-looking and process-based approach for enabling early identification and mitigation of key risks,” Bangladesh Bank wrote. “It assumes a dynamic and flexible supervisory process focusing on the assessment of inherent risks and the effectiveness of internal controls and overall risk governance within the banks to determine their composite risk profile, and level of supervisory intensity tailored to their unique risk profile.”
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