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Final Report on Guidelines on internal governance under Directive 2013/36/EU (EBA/GL/2021/05) (applicable from 31 December 2021)Executive summaryBackground and rationaleGuidelines on internal governance1. Compliance and reporting obligations (paras. 1-4)Status of these guidelines (paras. 1-2)Reporting requirements (paras. 3-4)2. Subject matter, scope and definitions (paras. 5-13)Subject matter (para. 5)Scope of application (para. 6-13)Definitions (para. 13)3. Implementation (paras. 14-15)Date of application (para. 14)Repeal (para. 15)4. Guidelines (paras. 16-234)Title I - Proportionality (paras. 16-19)Title II - Role and composition of the management body and committees (paras. 19-67)1 Role and responsibilities of the management body (paras. 19-27)2 Management function of the management body (paras. 28-31)3 Supervisory function of the management body (paras. 32-34)4 Role of the chair of the management body (paras. 35-39)5 Committees of the management body in its supervisory function (paras. 40-67)5.1 Setting up committees (paras. 40-45)5.2 Composition of committees (paras. 46-55)5.3 Committees’ processes (paras. 56-60)5.4 Role of the risk committee (paras. 61-63)5.5 Role of the audit committee (para. 64)5.6 Combined committees (paras.65-67)Title III - Governance framework (paras. 68-93)6 Organisational framework and structure (paras. 68-82)6.1 Organisational framework (paras. 68-70)6.2 Know your structure (paras,. 71-75)6.3 Complex structures and non-standard or non-transparent activities (paras. 76-82)7 Organisational framework in a group context (paras. 83-90)8 Outsourcing policy (paras. 91-93)Title IV - Risk culture and business conduct (paras. 94-140)9 Risk culture (paras. 94-98)10 Corporate values and code of conduct (pars. 99-104)11 Conflict of interest policy at institutional level (paras. 105-107)12 Conflict of interest policy for staff (paras. 108-131)12.1 Conflict of interest policy in the context of loans and other transactions with members of the management body and their related parties (paras. 120-128)12.2 Documentation of loans to members of the management body and their related parties and additional information (paras. 129-131)13 Internal alert procedures (paras. 132-138)14 Reporting of breaches to competent authorities (paras. 139-140)Title V - Internal control framework and mechanisms (paras. 141-224)15 Internal control framework (paras. 141-145)16 Implementing an internal control framework (paras. 146-151)17 Risk management framework (paras. 152-162)18 New products and significant changes (paras. 163-168)19 Internal control functions (paras. 169-178)19.1 Heads of the internal control functions (paras. 172-174)19.2 Independence of internal control functions (paras. 175)19.3 Combination of internal control functions (para. 176)19.4 Resources of internal control functions (paras. 177-178)20 Risk management function (paras. 179-203)20.1 RMF’s role in risk strategy and decisions (paras. 187-188)20.2 RMF’s role in material changes (paras. 189-190)20.3 RMF’s role in identifying, measuring, assessing, managing, mitigating, monitoring and reporting risks (paras. 191-197)20.4 RMF’s role in unapproved exposures (paras. 198-199)20.5 Head of the risk management function (paras. 200-203)21 Compliance function (paras. 204-213)22 Internal audit function (paras. 214-224)Title VI - Business continuity management (paras. 225-230)Title VII - Transparency (paras. 231-234)Annex I - Aspects to take into account when developing an internal governance policy5. Accompanying documents5.1. Draft cost-benefit analysis/impact assessment5.2. Summary of responses to the consultation and the EBA’s analysis
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AI Summary of 20.2 RMF’s role in material changes (paras. 189-190)

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Version date: 2 July 2021 - onwards

20.2 RMF’s role in material changes (paras. 189-190)

189. In line with Section 18, before decisions on material changes or exceptional transactions are taken, the RMF should be involved in the evaluation of the impact of such changes and exceptional transactions on the institution’s and group’s overall risk, and should report its findings directly to the management body before a decision is taken.

190. The RMF should evaluate how risks identified could affect the institution’s or group’s ability to manage its risk profile, its liquidity and its sound capital base under normal and adverse circumstances.

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