Banks' Risk Management Framework

The enhancement of the banks’ Risk Management Framework (RMF) is a cornerstone of financial stability since solid risk management cannot be substituted by share capital increases in order to absorb losses. As early as at the time of the first recapitalization of the Greek systemic banks, the HFSF marked the improvement of banks’ risk management as a top priority area.

The HFSF continuously monitors and advises on the further enhancement of the Banks’ Risk Management Frameworks, utilizing relative provisions of the RFA, that prescribe banks’ risk governance, as well as the strengthening of the role and the status of the Chief Risk Officer (CRO) (e.g. CRO being a member of the Executive Committee).

In addition, capitalizing on the knowledge obtained through the detailed review of the bank’s Boards’ and Board Risk Committees’ materials, as well as on the areas of improvement identified during the Corporate Governance reviews of the banks’ Boards of Directors, the HFSF provided Greek systemic banks with detailed recommendations, relating among others, to the enhancement of risk culture and risk governance in banks and to the improvement of the performance and functioning of the Board Risk Committee by including experienced and skilled independent non-executive members and enhancing reporting requirements and improving the quality of the Committee material.

HFSF also actively encourages initiatives for the Greek Banks that promote capital efficiency, risk mitigation and shareholder value creation. In the past two years HFSF has joined Prime Collateralised Securities, a not-for-profit independent initiative promoting safe securitisation products that could ensure a healthy financial flow of credit to the real economy without creating systemic risks for the European financial system, and has also sponsored a Symposium on Securitizations in the Greek market in cooperation with PCS.