International Diploma in Compliance
Due date: 24 August 2015
In 2010 the Basel Committee on Banking Supervision (BCBS) issued a final set of principles for
enhancing sound corporate governance practices at banking organisations, intended to ‘address
fundamental deficiencies in bank corporate governance that became apparent during the financial
crisis’. These principles ‘set out best practices for banking organisations. Key areas of particular focus
include: (1) the role of the board; (2) the qualifications and composition of the board; (3) the
importance of an independent risk management function, including a chief risk officer or equivalent;
(4) the importance of monitoring risks on an on-going firm-wide and individual entity basis, (5) the
board’s oversight of the compensation systems; and (6) the board and senior management’s
understanding of the bank’s operational structure and risks.’
In October 2014 a consultative document on revisions to these principles was issued. The revised
principles intend to build on the 2010 principles and specifically:
?

strengthen the guidance on risk governance, including the risk management roles played by
business units, risk management teams, and internal audit and control functions (the three
lines of defence) and the importance of a sound risk culture to drive risk management within
a bank;

?

expand the guidance on the role of the board of directors in overseeing the implementation of
effective risk management systems;

?

emphasise the importance of the board’s collective competence as well as the obligation on
individual board members to dedicate sufficient time to their mandates and to remain current
on developments in banking;

?

provide guidance for bank supervisors in evaluating the processes used by banks to select
board members and senior management;

?

and recognise that compensation systems form a key component of the governance and
incentive structure through which the board and senior management of a bank convey
acceptable risk-taking behaviour and reinforce the bank’s operating and risk culture.’
Information drawn from Basel Committee website: http://www.bis.org/publ/bcbs176.htm and
http://www.bis.org/publ/bcbs294.htm

a) With reference to the information in the above extracts, together with the findings of your
own research, assess how the increased focus on corporate governance issues has impacted
a sector and jurisdiction of your choice. Illustrate your answer with appropriate examples.
(40 marks)
b) Select two of the principles referred to in the above extract and, with reference to the findings
of your own research and to a firm in a sector and jurisdiction of your choice, compose a
guidance note to the senior management of that firm that:
?

explains why there have been recent developments in respect of these principles and why
they are of importance in enhancing sound corporate governance practices,

?

details the actions that should be taken within the firm to ensure that the principles are
properly implemented.
(60 marks)
Total 100 marks

Guidance
?

Please submit one document only in a Microsoft word format

?

Save the assignment as your user ID number e.g. ICTD373055

?

Word Count should be between 2,500-3,500. This includes all footnotes, in text references and
appendices but excludes any bibliography, reference or contents page(s). N.B. Appendices
should only be used in exceptional circumstances and should consist of only brief extracts or
tables.

?

Further advice on all aspects of assignment writing and submission is available in the Student
Support Area

International Diploma in Compliance
Due date: 24 August 2015
In 2010 the Basel Committee on Banking Supervision (BCBS) issued a final set of principles for
enhancing sound corporate governance practices at banking organisations, intended to ‘address
fundamental deficiencies in bank corporate governance that became apparent during the financial
crisis’. These principles ‘set out best practices for banking organisations. Key areas of particular focus
include: (1) the role of the board; (2) the qualifications and composition of the board; (3) the
importance of an independent risk management function, including a chief risk officer or equivalent;
(4) the importance of monitoring risks on an on-going firm-wide and individual entity basis, (5) the
board’s oversight of the compensation systems; and (6) the board and senior management’s
understanding of the bank’s operational structure and risks.’
In October 2014 a consultative document on revisions to these principles was issued. The revised
principles intend to build on the 2010 principles and specifically:
?

strengthen the guidance on risk governance, including the risk management roles played by
business units, risk management teams, and internal audit and control functions (the three
lines of defence) and the importance of a sound risk culture to drive risk management within
a bank;

?

expand the guidance on the role of the board of directors in overseeing the implementation of
effective risk management systems;

?

emphasise the importance of the board’s collective competence as well as the obligation on
individual board members to dedicate sufficient time to their mandates and to remain current
on developments in banking;

?

provide guidance for bank supervisors in evaluating the processes used by banks to select
board members and senior management;

?

and recognise that compensation systems form a key component of the governance and
incentive structure through which the board and senior management of a bank convey
acceptable risk-taking behaviour and reinforce the bank’s operating and risk culture.’
Information drawn from Basel Committee website: http://www.bis.org/publ/bcbs176.htm and
http://www.bis.org/publ/bcbs294.htm

a) With reference to the information in the above extracts, together with the findings of your
own research, assess how the increased focus on corporate governance issues has impacted
a sector and jurisdiction of your choice. Illustrate your answer with appropriate examples.
(40 marks)
b) Select two of the principles referred to in the above extract and, with reference to the findings
of your own research and to a firm in a sector and jurisdiction of your choice, compose a
guidance note to the senior management of that firm that:
?

explains why there have been recent developments in respect of these principles and why
they are of importance in enhancing sound corporate governance practices,

?

details the actions that should be taken within the firm to ensure that the principles are
properly implemented.
(60 marks)
Total 100 marks

Guidance
?

Please submit one document only in a Microsoft word format

?

Save the assignment as your user ID number e.g. ICTD373055

?

Word Count should be between 2,500-3,500. This includes all footnotes, in text references and
appendices but excludes any bibliography, reference or contents page(s). N.B. Appendices
should only be used in exceptional circumstances and should consist of only brief extracts or
tables.

?

Further advice on all aspects of assignment writing and submission is available in the Student
Support Area