7. Risk Management and Monitoring
Effective from 2022-04-25 - Sep 30 2022
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| 7.1 | Banks should analyze and assess current and prospective investments, taking into consideration all risks that may arise from such investment. The results and any risks identified in the assessment should be reported to the relevant committee responsible for the bank’s investment activities. | ||
| 7.2 | Banks investments should be in-line with their risk management framework. Banks should have an adequate risk management system to identify, measure, and manage the risks generated from investment activities. | ||
| 7.3 | Before engaging in any investments, Banks should comply with all relevant Anti Money Laundering and Terrorism Financing requirements issued by SAMA. | ||
| 7.4 | The investment portfolio should be in-line with the bank’s investment objectives as specified in their Investment Strategy. Banks should monitor the performance of their investment portfolio on continuous basis and establish benchmark for monitoring purposes where applicable. | ||
| 7.5 | Banks should diversify their investment portfolio to avoid concentration risk; also, they should determine their diversification strategy based on their risk tolerance. | ||
| 7.6 | Banks should perform an annual portfolio level stress-testing taking into consideration macro-economic circumstances to identify the bank’s risk-bearing ability and verify how potential risks are covered, and provide the results of the assessment to SAMA upon request. | ||
| 7.7 | Banks should have adequate resources to manage their investment portfolio including strong managerial /investment capabilities, knowledgeable staff with relevant professional experience. | ||