KARACHI, Feb 7: State Bank Governor Yaseen Anwar has stressed the need for inculcating a risk culture within the organisation with open communication channels between business lines and control functions for the sound management of operational risks.

While delivering his opening remarks at the ‘Conference on Operational Risk Management’ at SBP Learning Resource Centre here on Thursday, he said that the SBP was cognizant of its responsibilities regarding sound operational risk management frameworks in banks.

“SBP will continue to play its role in ensuring effectiveness of the established frameworks in banks. We expect each bank to develop and improve its risk management and control framework depending on nature, location, size, sophistication, complexity of business operations and approved risk appetite,” Anwar added.

Stressing the need for close cooperation between banks and SBP, Anwar said that the exchange of ideas was very important in capacity building for operational risk management.

He expressed the hope that this conference would provide a good opportunity to exchange thoughts on risk management and learn from each other’s experiences.

Highlighting the importance of risk management, the SBP governor said that the central bank would expand its existing reporting mechanism in order to have comprehensive and current information on operational risk of banks.

The governor said that the SBP had adopted a two-pronged strategy for effectively addressing the issues of operational risks. First, update the existing instructions on frauds and forgeries and monitoring in banks.

Second, issuance of guidelines on operational risk data collection to enhance the scope of loss data gathering in line with the Basel Accord requirements and to provide the industry with minimum set of

instructions for consistent recognition of losses and their reporting to a centralised data consortium.

“These projects are at an advanced stage of consultations with the industry and these guidelines/instructions will help banks improve their operational risk management processes,” he added.