Risk management

Banking activities form an essential element of meeting the Bank's objectives and ensure its financial strength and independence. The BIS engages in banking activities that are customer-related as well as activities that are related to the investment of its equity, each of which may give rise to financial risk comprising credit, market and liquidity risks. The Bank is also exposed to operational risk.

Within the risk framework defined by the Board of Directors, the Management of the Bank has established risk management policies designed to ensure that these risks are identified, appropriately measured and controlled, and monitored and reported. To achieve these objectives, the Bank has an independent, integrated Risk Management function covering both financial and operational risks. The Risk Management unit develops corresponding policies and proposals, and monitors adherence to defined rules and limits.

The Head of Risk Management, who is part of the Management of the BIS, reports directly to the Deputy General Manager and acts as his/her deputy in matters related to risk management.

Capital adequacy

As an international financial institution that is overseen by a Board composed of Governors of major central banks and that, by nature, has no national supervisor, the Bank is committed to maintaining its superior credit quality and financial strength, in particular in situations of financial stress. The Bank continuously assesses its capital adequacy for financial and operational risks, based on an annual capital planning process that focuses on two elements: an economic capital framework and a financial leverage framework.