Myanmar’s Financial Institutions Face Risk Management Challenges, IMF Warns

Strengthening Banking Supervision in Myanmar

The International Monetary Fund (IMF) has been working closely with the Central Bank of Myanmar (CBM) to strengthen banking supervision in the country. In 2018 and early 2019, the IMF’s Monetary and Capital Markets Department visited Yangon to support the CBM in developing bank regulation and supervision.

Introducing a Risk-Based Approach

The visit aimed at introducing a more risk-based approach to supervision, enabling financial institutions to assess and mitigate risks more effectively. A key outcome of the mission was the development of a Guide to Risk-Based Supervision, which outlines approaches to risk assessment and risk mitigation based on international best practices.

Identifying Risks in Myanmar’s Financial Institutions

According to the guide, Myanmar’s financial institutions face a range of risks, including:

• Legal, regulatory, and reputational risk
• Strategic risk
• Group and related parties’ risk
• Credit risk
• Market risk
• Operational risk
• Liquidity risk

Implementing Risk Assessments

The Central Bank is implementing the new approach over the next two years, with a commitment to perfecting it by 2020. In a significant development, the CBM has already started conducting risk assessments using a new risk matrix tool as examinations come due.

Enhancing Risk Management Practices

This marks a significant step towards enhancing risk management practices in Myanmar’s financial sector. The use of the risk matrix tool will help financial institutions to better identify and mitigate risks, ultimately contributing to greater stability and resilience in the financial system.

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