Country Risk Management

Country Exposure Reporting System

To effectively manage country risk, the bank must have a reliable system for capturing and categorizing the volume and nature of foreign exposures. The reporting system should cover all aspects of the bank’s operations, whether conducted through paper transactions or electronically. An accurate country exposure reporting system is also necessary to support the regulatory reporting of foreign exposures on the quarterly FFIEC 009 Country Exposure Report.

The board of directors should regularly receive reports on the level of foreign exposures. If the level of foreign exposures in a bank is significant, [2] or if a country to which the bank is exposed is considered to be high risk, exposures should be reported to the board at least quarterly. More frequent reporting is appropriate when a deterioration in foreign exposures would threaten the soundness of the bank.

2.
For purposes of this guidance, concentrations of exposure to individual countries that exceed 25 percent of the bank’s Tier 1 capital plus the ALLL are considered to be significant; however, in the case of particularly troubled countries, lesser degrees of exposure may also be considered to be significant.
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