Risk Management Structure :

Banking companies should create an effective risk management structure to handle the risks associated with the bank’s business models and operations. The risk management structure should cover the Credit, Market, Operational and other risks. The structure should be ably supported by the technology in identification and monitoring process of risks.

The Risk Management Committee should be formed at the Board level with the overall responsibility to monitor and manage the overall risks of the bank.

Asset-Liability Management Committee (ALCO) is a strategic decision making body, formulating and overseeing the function of asset liability management (ALM) of a bank.

ALCO is headed by the Managing Director or the Chief Executive Officer.

The functions of these risk management committees are to identify, assess, evaluate, monitor and measure the risk profile of the bank. The Risk Management Committee also develops the policies and procedures, reviews the pricing models, and also identifies new risks. The Risk Management Committee is assisted by other individual risk management sub-committees.