Country Risk Management

Monitoring Country Conditions

The bank should have a system in place to monitor current conditions in each of the countries where it has significant exposure. The level of resources devoted to monitoring conditions within a country should be proportionate to the bank’s level of exposure and the perceived level of risk. If the bank maintains an in-country office, reports from the local staff are an obviously valuable resource for monitoring country conditions. In addition, periodic country visits by the regional or country manager are important to properly monitor individual exposures and conditions in a country. The bank may also draw on information from rating agencies and other external sources.

There should also be regular, on-going communication between senior management and the responsible country managers. The bank should not rely solely on informal lines of communication and ad hoc decision-making in times of crisis. Established procedures should be in place for dealing with exposures in troubled countries, including contingency plans for reducing risk and, if necessary, exiting the country.

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