The Basel Committee on Banking Supervision is progressing in its efforts to enhance supervisory practices, with a particular focus on information and communication technology (ICT) risk management and synthetic risk transfers.
Basel Committee aims to strengthen supervisory effectiveness post-2023 banking turmoil.
ICT risk management practices will be assessed and reported by 2026.
Investigation into synthetic risk transfers will assess their risks and benefits.
The Basel Committee on Banking Supervision has been taking important steps towards enhancing its supervisory practices, considering emerging risks in the financial industry, including ICT-related events and the growing use of synthetic risk transfers.
Strengthening supervisory effectiveness post-2023 banking turmoil
In the wake of the 2023 banking crisis, the Basel Committee has moved with speed to improve its supervisory tools. The committee debates in its virtual meetings in March 2025 have centred around sharpening regulators' tools to have them better deal with different kinds of financial risks. The committee is formulating pragmatic solutions to enable supervisors to evaluate liquidity risks, interest rate risks in the banking book, and business model sustainability. The committee intends to publish an update on the effectiveness of these tools and their influence on supervisory practices globally by mid-2025.
Addressing emerging risks: ICT and synthetic risk transfers
The Basel Committee is also looking at more recent financial risks arising from increasing technological integration in banking processes. With more frequent ICT incidents on a global level, the committee is looking to review how banks are addressing their ICT risks. In keeping with its efforts to continually evaluate risk management processes, the committee aims to publish an exhaustive report by 2026 on international best practices for managing ICT risk. This initiative seeks to guarantee that banks possess sufficient resilience to withstand technological disruptions, which are now increasingly becoming a concern.
Furthermore, the committee has also identified increased application of synthetic risk transfers (SRTs), which enable banks to offload their credit risk to non-bank financial institutions (NBFIs). While not a new product in terms of finances, the composition of SRT transactions has developed in recent history, and this requires the committee to make an extensive examination into the advantages and disadvantages of such products. By researching SRTs, the Basel Committee works to ensure banks can manage risk and adhere to regulatory systems effectively.