Regulatory Alerts2019-05-27
Diagram of the Risk Assessment and Controls Application Methodology
The regulatory authority establishes a standardized Risk Assessment and Controls System that mandates comprehensive qualitative evaluations of specific risks, internal governance structures, and control activities alongside quantitative CAELS metrics covering capital adequacy, asset quality, earnings, liquidity, and market sensitivity. The framework requires financial institutions to systematically identify inherent risks, implement targeted control measures, and monitor organizational culture, strategic planning, and audit functions to ensure robust risk management. Compliance with this methodology ensures consistent application of risk evaluation diagrams across all operational and managerial levels, thereby enhancing regulatory oversight and institutional resilience.
Risk Assessment and Controls System
Methodology
Qualitative Assessment
-
Specific Risks and Controls
- Credit Risk
- Liquidity Risk
- Market Risk
- Compliance Risk
- Strategy Risk
- Operational Risk
- Reputation Risk
- IT Risk
- Inherent Risk Assessment
- Risk Elements
- Specific Controls Assessment
- Risk Assessment
- Identification and Assessment
- Control Activities
- Monitoring and Control
- Risk Assessment
-
Internal Governance
- Organization
- Control Environment
- Organizational Structure and Culture
- Information and Communication
- Reporting and Distribution Channels
- Monitoring Activities
- Internal and External Audit
- Control Environment
- Management
- Control Environment
- Strategic Planning
- Management Structure and Quality
- Risk Attitude
- Control Environment
- Organization
Quantitative Assessment
- CAELS
- Capital
- Capital Adequacy
- Asset Quality
- Asset Quality
- Earnings
- Results or Profitability
- Liquidity
- Maturity or Liquidity
- Sensitivity
- Market Sensitivity
- Capital