For monitoring reputational risk purposes, it is recommended that the credit institution provide for:
- How to monitor your reputation risk;
- How to respond in a timely manner to changes in business practices;
- procedure and timeliness of response to proposals received by the credit institution of founders (participants), clients and counterparties, as well as other interested persons.
Taking into account the capabilities, nature and scope of activities of the credit institution, it is recommended to define in internal documents
The business unit (designate an employee) responsible for managing legal risk and reputation risk.
The functions of this business unit (employee) can include:
- monitoring of factors of legal risk and (or) risk of loss of business reputation and their impact on the level of corresponding risk in the activity and financial condition of the credit institution, carrying out an analysis of adequacy of content of internal documents (including internal control rules in order to counteract legalization (laundering) of proceeds of crime and financing of terrorism) taking into account changes in internal and external conditions of the credit institution 's activity;
- Communicate the identified risks to the management bodies of the credit institution;
- Develop measures to minimize legal and/or reputation risk;
- Regularly report to the relevant authorities of the credit institution on the level and status of legal risk management and/or reputation risk.
It is recommended to ensure the independence of the activity of the division (employee) responsible for managing legal risk and risk of loss of business reputation, which means its independence from the activity of the divisions of the credit institution engaged in banking transactions and other transactions and reporting, the right to report to the Board of Directors (Supervisory Board) on issues related to the management of legal and reputational risk, as well as accountability to the relevant management bodies of the credit institution.
Internal documents of the credit institution also recommend to define the procedure for participation in the management of legal risk and risk of loss of business reputation (In accordance with the established powers) of the Board of Directors (Supervisory Board), sole and collegiate executive body, employees involved in banking transactions and other transactions, personnel and legal services, departments and employees performing internal control, including for the purpose of counteracting legalization (Laundering) proceeds of crime and the financing of terrorism, security services and other units of a credit institution.
The Board of Directors (Supervisory Board), sole and collegiate executive bodies are recommended to organize control over compliance with the procedure for management of legal risk and risk of loss of business reputation.
The Board of Directors (Supervisory Board) is recommended to regularly consider reports and/or reports on actions of the credit institution regarding positive and negative feedback of participants of civil turnover in order to assess timeliness and adequacy of response to claims submitted by the credit institution.
It is recommended that when establishing a procedure for encouraging employees to take into account the degree of their participation in the management of legal risk and risk of loss of business reputation.