Global stability body drafts standards for financial majors on senior managers' risk appetite duties

The Financial Stability Board has issued draft principles detailing the responsibilities of boards, chief executives, chief risk officers and chief financial officers for establishing the risk appetite of systemically important financial institutions (SIFIs) and other firms. The ‘Principles for an Effective Risk Appetite Framework’ (PDF) state that firms’ boards must establish a firm-wide risk appetite framework (RAF) and approve a risk appetite statement, developed in collaboration with the chief executive officer (CEO), chief risk officer (CRO) and chief financial officer (CFO). The FSB is the Group of 20 major economies' body for coordinating financial sector policies. The principles document defines a risk appetite framework as: "The overall approach, including policies, processes, controls, and systems through which risk appetite is established, communicated, and monitored. It includes a risk appetite statement, risk limits, and an outline of the roles and responsibilities