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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Business Standards > RM Risk Management > RM-1 General Requirements
  • RM-1 General Requirements

    • RM-1.1 Risk Management Systems and Controls

      • RM-1.1.1

        A licensee must take reasonable care to establish and maintain effective systems and controls as are appropriate to its business to manage its risks. These policies must be documented and regularly reviewed.

      • RM-1.1.2

        The licensee's identification, assessment, management and reporting of risks must consider (but is not limited to) the management of creditG , liquidityG , marketG , technicalG , operationalG (including outsourcingG ) and groupG risks, as outlined in Chapters RM-2 to RM-8.

        Amended: January 2007

      • RM-1.1.3

        As noted in Paragraph CA-A.1.2, insurance firmsG must regularly carry out their own assessment of their capital needs, appropriate to their risk profile, and maintain a process for monitoring and maintaining their actual capital in line with their assessment.

      • RM-1.1.4

        For purposes of Paragraph RM-1.1.3, the CBB does not prescribe the detailed form of such assessment, in order to give insurance firmsG flexibility to develop their own approaches. Where a firm's assessment suggests that a level of capital that should be held is higher than the minimum required per Chapter CA-2, the CBB would expect firms to hold capital in line with their assessment.

        Amended: January 2007

      • RM-1.1.5

        The licensee must determine if any additional risk categories, other than those referred to in Paragraph RM-1.1.2 and RM-1.1.3, are relevant to its business and therefore need to be addressed.

        Amended: January 2007

      • Risk Management

        • RM-1.1.6

          In the case of incorporated insurance firmsG and insurance brokersG , the Board of Directors must take responsibility for the establishment and oversight of effective risk management systems and controls.

        • RM-1.1.7

          In the case of Bahraini insurance brokersG that are unincorporated entities or single person companies, the General ManagerG must take responsibility for the establishment and oversight of effective risk management systems and controls.

          Amended: October 2007

        • RM-1.1.8

          Additional requirements relating to Boards and senior management in terms of risk management and controls are specified in Module HC (High-Level Controls). The Board may delegate various functions and tasks, but retains ultimate responsibility. However, the CBB will also take into account the responsibility of the Chief Executive OfficerG or General ManagerG of a licensee, within the framework of delegated authorities laid down by the Board.

          Amended: January 2007
          Amended: October 2007

        • RM-1.1.9

          In assessing the systems and controls framework, the CBB would expect the Board to be able to demonstrate that it provides suitable prudential oversight and establish a risk management system that includes setting and monitoring policies so that all major risks are identified, measured, monitored and controlled on an on-going basis. The risk management systems should be approved and periodically reviewed by the Board as outlined in Paragraph HC-1.1.5.

          Amended: January 2007

      • Risk Management Function

        • RM-1.1.10

          The CBB requires that all insurance firmsG establish an independent risk management function, staffed by a head of risk management, duly approved by the CBB in accordance with Paragraph AU-1.2.1.

          Added: April 2014

        • RM-1.1.10A

          Depending on the scale and complexity of their operations, insurance brokersG must consider establishing an independent risk management function.

          Amended: April 2014

        • RM-1.1.10B

          The risk management function must be independent of risk-taking units and must not have any conflict of interest with any other function. The risk management function must have direct access to the Board and must report to the Board and senior management.

          Added: April 2014

        • RM-1.1.11

          Where there is a risk management function, the licensee must document the process by which it manages risks, and how it directly reports to the Board of directors on these risks.

          Amended: April 2014

        • RM-1.1.12

          [This Paragraph was deleted in April 2014.]

          Deleted: April 2014

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