| Article 20 | Financial holding companies and the banking business shall formulate appropriate risk management policies and procedures, and establish an independent and effective risk management framework, which shall include procedures and mechanisms for identifying, assessing, measuring, and monitoring risks in order to control and report the overall risk tolerance, the current status of risks assumed, determination of risk response strategies, and the compliance status of risk management procedures.
The risk management policies and procedures under the preceding paragraph shall be passed by the board of directors and be reviewed and revised in a timely manner. |
| Article 21 | Financial holding companies and the banking business shall establish a dedicated risk management unit subordinate to the general manager to take charge of the planning, management, and execution of the risk management system. The unit shall not concurrently engage in other operations that present a conflict of interest with its duties. A person ranked vice general manager or above, or a person with equivalent responsibilities, shall be appointed to serve as the Chief Risk Officer (CRO) to oversee risk management affairs.
The dedicated risk management unit shall periodically measure relevant risks and submit risk management reports to the board of directors. Upon identifying a significant risk exposure that might adversely affect its financial or business status or compliance with applicable acts and regulations, it shall take immediate and adequate countermeasures and submit a report to the board of directors. The overall implementation of risk management of the preceding year shall be incorporated into the assessment of the implementation of the internal control system referred to in Paragraph 1 of Article 8 annually.
The dedicated risk management unit shall establish clear and appropriate mechanisms for the transmission, consultation, coordination, and communication of risk management.
Where the competent authority has provided otherwise for credit cooperatives and bills finance companies regarding the provisions of Paragraph 1, such provisions shall govern. With respect to the establishment of the dedicated risk management unit, a credit cooperative may designate a head office management unit as an alternative. |
| Article 22 | The risk management mechanism of a financial holding company shall at least include the following matters:
1. Monitoring the capital adequacy of the financial holding company and of all subsidiaries based on their respective business scale, credit, market, and operational risks, and future business trends.
2. Adopting adequate long- and short-term financing principles and guidelines and establishing management mechanisms for measuring and monitoring the liquidity positions of the financial holding company and of all subsidiaries, by which to measure, monitor, and manage the liquidity risks of the financial holding company and of all subsidiaries.
3. Making various investment allocations after having considered the overall risk exposure, equity capital, and characteristics of liabilities of the financial holding company, and establishing various measures to manage investment risks.
4. Establishing uniform assessment methodologies for rating and classifying the quality of assets of the financial holding company and of all subsidiaries, calculating and controlling large risk exposures of the financial holding company and its subsidiaries, carrying out periodic reviews, and faithfully setting aside allowances or reserves for loss.
5. Identifying, assessing, and measuring potential emerging risks, and implementing risk response strategies. |
| Article 23 | The risk management mechanisms of a banking business shall at least include the following matters:
1. Monitoring the capital adequacy based on its business scale, credit, market, and operational risks, and future business trends.
2. Establishing management mechanisms for measuring and monitoring the liquidity positions of the banking business, by which to measure, monitor, and manage the liquidity risks.
3. Making various investment allocations after having considered the overall risk exposure, equity capital, and characteristics of liabilities, and establishing various measures to manage investment risks.
4. Establishing uniform assessment methodologies for rating and classifying the quality of assets, calculating and controlling large risk exposures, carrying out periodic reviews, and faithfully setting aside allowances or reserves for loss.
5. Identifying, assessing, and measuring potential emerging risks, and adopting risk response strategies. |