Principles for the management of credit risk

The Basel Committee on Banking Supervision has issued a public consultation on a limited update of the Principles for the Management of Credit Risk ('Credit Risk Principles').

The Credit Risk Principles, initially published in 2000, provide guidelines for banking supervisory authorities to evaluate banks' credit risk management processes in four key areas: (i) establishing a suitable credit risk environment; (ii) operating under a sound credit-granting process; (iii) maintaining an appropriate credit administration, measurement, and monitoring process; and (iv) ensuring adequate controls over credit risk.

In 2023 the Committee mandated a review of the Credit Risk Principles to determine if they remain fit for purpose given the developments in global financial markets, related credit risks and trends, and changes to the supervisory and regulatory landscape over the past 25 years. The review confirmed their ongoing relevance while identifying certain parts that have become either obsolete, superseded and redundant, or are not fully aligned with the current Basel Framework. Therefore, the Committee proposes to make a limited set of technical amendments to align the Credit Risk Principles with the current Basel Framework and the latest guidelines issued by the Committee. The proposed update does not aim to change the content of the existing principles or cover new topics.