Consistency and Continual Improvement in On-Site Programmes Across Sectors

As part of its commitment to ensuring effective regulatory oversight, the [Authority] has implemented a consistent approach to on-site programmes across all sectors. This includes regular reviews and enhancements to ensure that these programmes remain relevant and effective.

Supervisory Actions

The Authority’s supervisory actions are designed to address potential weaknesses or issues identified during the assessment process. These actions may include:

• Enhanced oversight
• Requiring changes to a firm’s operations to ensure compliance with regulatory requirements
• Employing other measures as deemed necessary

Sectoral Risk-Based Supervisory Processes

To assess risks in various sectors, including banking, trust, corporate services, and investment, the Authority uses a six-step programme:

Identifying Risk Impact Groups and Prioritisation

• This stage involves identifying potential problems in supervised companies and prioritising their supervision based on analysis of:
  • Statutory returns
  • Financial statements
  • Prudential information
  • Market conditions
  • Industry trends
  • Other factors

Fundamental Monitoring

• Potentially problematic information or activity is flagged for review using tools such as:
  • Financial ratio analysis
  • Peer analysis
  • Trend analysis
  • Stress testing

Risk Model Application

• The Authority’s risk model is applied to assess the level of risk associated with each company.

Enhanced Monitoring

• This stage involves more in-depth reviews of a company’s operations, including:
  • On-site visits
  • Desk-based work

Composite Risk Rating

• A composite risk rating is assigned to each company based on all data gathered during the assessment process.

Supervisory Attention Ranking

• The nature and extent of regulatory action required are determined by the Supervisory Attention Ranking, which takes into account:
  • Factors such as the Composite Risk Rating
  • Non-compliance with regulations

Insurance Sector

The Authority’s risk-based approach to supervising the insurance sector involves a series of steps:

Fundamental Monitoring

• Annual reviews of statutory returns and ongoing assessments of publicly available information.

Prudential Visits

• Regular visits to insurance companies to discuss:
  • Corporate strategic initiatives
  • Industry trends
  • Other factors of concern

Enhanced Monitoring

• On-site and off-site reviews of a company’s operations, including:
  • Interviews
  • Tests
  • Walk-throughs

Composite Risk Rating

• A composite risk rating is assigned to each insurance company based on all data gathered during the assessment process.

Supervisory Actions

• Reports are prepared and reviewed within the Authority that address concerns and issues that may warrant corrective action.

Follow-up

• The Authority ensures that all necessary actions have been taken to complete the risk-based review of a subject company.

By implementing this consistent approach to on-site programmes across sectors, the Authority is committed to ensuring effective regulatory oversight and promoting a safe and stable financial system.