Title[ Part 3: The Second Pillar - Supervisory Review Process
Section[ Principle 1: 4. Monitoring and reporting
743. The bank should establish an adequate system for monitoring and reporting risk exposures and assessing how the bank’s changing risk profile affects the need for capital. The bank’s senior management or board of directors should, on a regular basis, receive reports on the bank’s risk profile and capital needs. These reports should allow senior management to:
w Evaluate the level and trend of material risks and their effect on capital levels;
w Evaluate the sensitivity and reasonableness of key assumptions used in the capital assessment measurement system;
w Determine that the bank holds sufficient capital against the various risks and is in compliance with established capital adequacy goals; and
w Assess its future capital requirements based on the bank’s reported risk profile and make necessary adjustments to the bank’s strategic plan accordingly.
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