Final guidelines for counterparty credit risk management

The Basel Committee on Banking Supervision has issued guidelines for banks' counterparty credit risk (CCR) management. The guidelines include key practices critical to resolving long-standing industry weaknesses in CCR management, including the need to: (i) conduct comprehensive due diligence at both initial onboarding, as well as on an ongoing basis; (ii) develop a comprehensive credit risk mitigation strategy to effectively manage counterparty exposures; (iii) measure, control and limit CCR using a wide variety of complementary metrics; and (iv) build a strong CCR governance framework. The guidelines will replace the Committee's Sound practices for banks' interactions with highly leveraged institutions published in January 1999.