19.5 Head of the risk management function

The head of the RMF should be responsible for providing comprehensive and understandable information on risks and advising the management body, enabling this body to understand the institution ’s overall risk profile. The same applies to the head of the RMF of a parent institution regarding the consolidated situation.

The head of the RMF should have sufficient expertise, independence and seniority to challenge decisions that affect an institution ’s exposure to risk s.

The head of the RMF should be able to challenge decisions taken by the institution ’ s management and its management body, and the grounds for objections should be formally documented. If an institution wishes to grant the head of the RMF the right to veto decisions (e.g. a credit or investment decision or the setting of a limit) made at levels below the management body, it should specify the scope of such a veto right, the escalation or appeal procedures, and how the management body will be involved.

Institutions should establish strengthened processes for the approval of decisions on which the head of the RMF has expressed a negative view. The management body in its supervisory function should be able to communicate directly with the head of the RMF on key risk issues, including developments that may be inconsistent with the institution ’s risk strategy and risk appetite.