regulatory risk

Organization of Regulatory Risk Management in Commercial Bank

Introduction. The absence of Russian corporate practice on the formation of a unified concept of internal control of commercial bank and methodological support of regulatory risk management process determines the relevance of the theory and methodology of approaches to the organization of internal control and management of regulatory risk in a business bank. Theoretical analysis. Regulatory risks are manifested with the emergence of the statutory or other regulatory legal act of direct or indirect exposure to the possibility of limiting the part of state bodies on the business processes of a commercial bank. Organization of management of the commercial bank regulatory risk consists in the activities of officials and divisions of companies, aimed at preventing and reducing the likelihood of regulatory risks, creating a comfortable legal environment for doing business. Empirical analysis. For the implementation of internal controls and facilitating the bank’s management bodies in ensuring its effective functioning, growth and development created the Internal Control as an element of internal control of commercial bank. Results. The vast majority of heads of departments recognize the usefulness and necessity of the implementation of measures to control the organization of regulatory risk, and is of particular importance not only to obtain regulatory risk level values expressed by a specific number, as the formation of the regulatory activity of the platform unit.

Theoretical Bases of Regulatory Risks Management in the Internal Control System of Banks

Introduction. The internal control system of large banks should be represented by two agencies: the Internal Audit Service, which will check the whole bank, all units of the credit institution for the manner in which they carry out established internal procedures of credit organization; and internal control service, which should identify the risks of losses due to violations of the laws or internal documents, evaluate regulatory risks, identify cases of conflict of interest, as well as to identify and analyze the operations that «are intricate and unusual nature», i.e., in fact, will serve as the international practice relating to the area of compliance. The emphasis of ICS’s work is transferred to the compliance risk management. Theoretical analysis. The comparative content’s analysis of the concepts of compliance risk and regulatory risk revealed that the concept of regulatory risk in the Russian economic practice is wider, systematic organized, relying on the regulatory framework of the Bank and may be taken as a base in technique of formation building of internal control service in bank. Results. Suggested the author’s definition of regulatory risk. Consideration of bank’s risks in their relationship with the violation of specific external and internal rules, regulations, standards and so on., allowed firstly, prove that the regulatory risk is the base for all other banking risks; secondly, to detect inadequate regulatory frameworks of Russian banks and justify the need for their development; secondly, to detect the imperfection of regulatory frame- works of Russian banks and justify the need for their development.