Country and transfer risk Exposure

Past version: effective from 21/10/2015 - 20/10/2015
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70. Chapter 4 does not provide limits on the size of an Authorised Person's Exposure to a particular country or region. However, an Authorised Person which has Large Exposures in a country or region should include in its Credit Risk policy:
a. the geographical areas in which the Authorised Person does or intends to do business;
b. its definition of Credit Risk Exposure and transfer risks (such as exchange restrictions) associated with doing business in each country or region;
c. how to measure its total Exposure in each country or region and across several countries or regions;
d. the types of business the Authorised Person intends to undertake in each country or region;
e. limits on Exposures to an individual country or region which the Authorised Person deals with, and sub-limits for different types of business if appropriate;
f. the procedure for setting and reviewing country or regional limits; and
g. the process by which the Authorised Person's actual country or regional Exposures will be monitored against limits and the procedure to be followed if the limits are breached.
71. When setting country or regional limits, an Authorised Person should consider:
a. the economic and political circumstances prevailing in the country or region;
b. the transfer risks associated with any particular country or region;
c. the type and maturity of business undertaken by the Authorised Person in a particular country or region;
d. the Authorised Person's existing concentration of country or regional risk;
e. the source of funding for the country or regional Exposure; and
f. sovereign or other guarantees offered.