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2	Introduction to Supervisory Risk Management Framework in Banks Nepal Rastra Bank(NRB) Act, 2002, section 35 (a) requires the NRB management is to design and implement sound risk management practices at the bank and ensure all possible risks are identified and monitored on a timely basis. It also requires Audit Committee to supervise the risk management practices in the bank.
3	"The Audit Committee of the..." The Audit Committee of the bank is also responsible to review whether all the major risks, to which the bank is exposed, as assessed and identified by the management, have been reviewed and systems have been established to mitigate those risks. This requirement has put the bank management to place an effective organization wide risk management practices.
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5	Key Elements of Risk Management Framework a. Governance and Organizational Structure The ultimate responsibility for the management of risk at central bank rests on the Board of Directors and their involvement in the key aspects of the risk management process is essential, particularly in setting the parameters of the process and in the review and consideration of the result. The board of directors is likely to delegate elements of the risk management to a committee but they are responsible for the key aspects and results.
6	"In practice" In practice, all the Department heads with the help of Risk Officer should be responsible for identifying and mitigating risks. They are also responsible to report to the Risk Management Unit on the progress of risk management exercise through the maintenance of risk register for their respective departments. Risk Management Unit is responsible for the regular follow up and maintenance of risk register of different departments. The Risk Management Structure at Nepal Rastra Bank is as follow :
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8	Role and Responsibilities of Board and Senior Management BOARD OF DIRECTORS The ultimate responsibility for the management of risk at central bank rests on the board of directors. The board of directors is responsible for: the overall responsibility for the management of risk decision making related to the risk management of overall NRB approval the risk tolerance policy and residual risk receiving risk reports from the Risk Management Committee on a half yearly basis (annual update of risk situation, overview of residual risk and approved during the year) delegating risk management function to Risk Management Committee
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10	"RISK MANAGEMENT COMMITTEE" RISK MANAGEMENT COMMITTEE The Risk Management Committee confirms the Risk ‘likelihood’ and ‘impact’ and assigned risk-mitigating actions where appropriate. The Risk Management Committee is responsible for: receiving risk report on a quarterly basis from Risk Management Unit giving direction and supervision to Risk Management Unit identification, assessment and mitigation of their own risk maintenance and enhancement of risk management framework and the methodology, documentation and coordination leading the development and improvement of the integrated risk management policy framework, and obtains management approval
11	"providing risk management guidance and..." providing risk management guidance and advice to other members of senior management regular review of all risks recorded in the Risk Register allocating risk mitigating actions closing risks which are no longer likely to impact communicating the actions taken to mitigate risk to Internal Audit Department
12	"DEPARTMENT HEADS" DEPARTMENT HEADS Department Heads are responsible for the overall identification and mitigation of risk in their department. Department Heads are responsible for: identifying the risk related to their departments carrying out the risk management trainings to the staff for the mitigation of risk receiving risk register report from risk officer on quarterly basis to be sent to risk management unit carrying out special studies to find out the new way of mitigating risk providing suggestions regarding risk management of organization to the higher level management
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