STM CB Operational Risk Guideline


On Jul. 1, STM CB published operational risk management guideline.


  • STM CB issued operational risk management guidelines for banks, insurers, pensions.
  • Management guideline titled, Guideline for the sound management of operational risk.
  • All STM CB regulated entities expected to observe guidance, apply to daily operations.
  • Guideline Overview
  • Based on BCBS Principles for the sound management of operational risk and on the International Association of Insurance Supervisors' (IAIS) Insurance core principles and Common framework for supervision of the internationally active insurance groups.
  • Addresses risks stemming from people, systems, processes, external events and legal risk but excludes strategic and reputational risks unless appropriate to do so.
  • Organized by fundamental principles; governance and internal audit; and assessment of risk environment including business continuity, communications technology and IT.
  • Guideline Key Points
  • Ops risk framework should be based on a firm-wide definition of operational risk.
  • Classify risk using Loss Event Type classifications provided in the Guideline appendix.
  • Outlines eleven minimum requirements for risk framework documentation including material activity triggers and limits, thresholds for inherent and residual risk exposure.
  • Stipulates supervisory board responsibilities including ops risk framework oversight, approval or risk policy, establishment of management culture, lines of responsibility.
  • In addition, responsibilities for the managing board and the internal audit functions.
  • Environment guidelines require event dataset with internal loss data, BCBS-compliant information and communications technology (ICT) framework, and regular reporting.
  • Akin to ICT, business continuity planning must be consistent and compliant with BCBS.
  • Effectiveness
  • Guideline applies from Aug. 1, 2024; entities will have one-year to take action to comply after which the guideline will be converted into a general binding regulation/

Regulators STM CB
Entity Types Bank; Ins; Pension
Reference Gd, PR PB2024-027, 7/1/2024;
Functions Audit; BCS; Compliance; C-Suite; Legal; Operations; Reporting; Risk; Technology
Countries Sint Marteen
Category
State
Products Banking; Insurance; Pensions
Regions Am
Rule Type Final
Rule Date 7/1/2024
Effective Date 8/1/2024
Rule Id 218228
Linked to N/A
Reg. Last Update 7/1/2024
Report Section International

Last substantive update on 07/05/2024