AI Summary of Article 74 Internal governance and recovery and resolution plans
Institutions are required to maintain robust governance arrangements, encompassing a clear organisational structure with defined lines of responsibility, effective risk management processes—including those for ESG risks, internal control mechanisms, compliant information systems, and remuneration policies that incentivise sound risk management and are gender neutral. These requirements must be comprehensive and proportionate to the institution’s business model and inherent risks.
The European Banking Authority (EBA) is tasked with issuing guidelines on these governance arrangements and on gender neutral remuneration policies in accordance with relevant regulations. Additionally, EBA will prepare a report within two years of the guidelines' publication to assess the application of gender neutral remuneration practices across institutions.
Article 74 Internal governance and recovery and resolution plans
1. Institutions shall have robust governance arrangements, which include:
(a) a clear organisational structure with well-defined, transparent and consistent lines of responsibility;
(b) effective processes to identify, manage, monitor and report the risks they are or might be exposed to, including ESG risks in the short, medium and long term, as well as concentration risk arising from exposures towards central counterparties, taking into account the conditions set out in Article 7a of Regulation (EU) No 648/2012 of the European Parliament and of the Council [Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).];
(c) adequate internal control mechanisms, including sound administration and accounting procedures;
(d) network and information systems that are set up and managed in accordance with Regulation (EU) 2022/2554;