The Central Bank has proposed measures to ensure that all credit institutions and insurance undertakings appoint a chief risk officer to oversee the financial wellbeing of the company.
It comes as part of an overarching review of regulations governing the sector, introduced in 2011 and now subject to amendment. There are further stipulations for cross-committee membership, particularly in audit and risk.
A deadline for industry submissions on a series of proposed changes to the corporate governance code has been set for October 1st.
“It has become generally accepted best practice that institutions have a role in place which is specifically responsible for managing the risk-control function, commonly referred to as the chief risk officer,” the regulator said in a consultation document published yesterday. “It is proposed to introduce a new requirement for all institutions to appoint a CRO.”
Also among the recommendations is a requirement that risk committees be composed of a majority of non-executive directors as well as a change to existing rules banning chairmen of credit and insurance institutions from holding similar roles in other institutions.
Group chairman positions
The Central Bank has conceded that the appointment of a group chairman can offer benefits to the boards of subsidiary institutions and will suggest they be allowed to hold more than one such position in medium-high, medium-low and low impact organisations so long as they are part of the same group.
“This individual can bring a valuable group perspective to the board as well as the ability to influence key decisions at the group level which may impact the subsidiary,” it said.
Similarly, chief executives of non-high-impact institutions would be permitted to hold up to two other chief executive roles. The review encourages cross-committee membership, particularly with risk and audit committees, to nurture greater awareness. In higher-level institutions, it is proposed no individual can chair two such committees simultaneously.
Also addressed is the issue of gender diversity on boards, the subject of widespread debate in recent times.
