Market Risk Policy of Banks in Finland

Abstract

Risk-taking is an integral part of the banking business. It is important for banks to find a balance between the risk a bank is willing to take and the returns it is expecting to achieve, while at the same time maintaining the sound financial position of the bank. Risk management seeks to address this. The risk management system established should be commensurate with the size and complexity of a bank’s business operations to ensure the bank’s risks are able to be managed according to the bank’s risk strategy and appetite. The decision-making framework for investment activities and risk management involves several parties within the Bank of Finland’s organisation. The risk control function has been detached from the Bank of Finland’s Banking Operations department to become a new independent risk control unit under the Administration department. Bank supervisors from different jurisdictions may have different requirements in the setting or structure of the board of directors.