This guidance details critical aspects of effective management of counterparty credit risk (CCR) and sets forth sound practices and supervisory expectations in this complex area. A detailed document, the guidance will likely require review of CCR processes at all banks and significant changes at many large ones. In particular, banks will need to ensure that boards of directors and senior management are appropriately involved in setting CCR tolerances and ensuring compliance with them, review risk management in this area to be sure it is robust and independent, review systems to ensure that the specifications in the guidance are or can soon be put in place and, in several areas, assess strategy to revise products and/or reduce exposures among groups of counterparties not previously treated as an aggregated exposure.
The full report is available to retainer clients. To find out how you can sign up for the service, click here.