{"id":105282,"date":"2025-07-07T00:00:00","date_gmt":"2025-07-07T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/dfsa-proposes-more-risk-and-credit-rule-changes\/"},"modified":"2025-07-07T00:00:00","modified_gmt":"2025-07-07T00:00:00","slug":"dfsa-proposes-more-risk-and-credit-rule-changes","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2025\/07\/07\/dfsa-proposes-more-risk-and-credit-rule-changes\/","title":{"rendered":"DFSA proposes more risk and credit rule changes"},"content":{"rendered":"

DFSA proposes <\/strong>BCP-aligned changes to risk and credit rules: <\/strong>The Dubai Financial Services Authority (DFSA) released a consultation paper (pdf)<\/a> proposing updates on risk management to bring them in line with the April 2024 revisions to the Basel Core Principles (BCP). The draft changes cover risk governance, credit risk, concentration risk, and related-party transactions. Public feedback is open until 5 September 2025.<\/strong><\/p>\n

IN CONTEXT- <\/strong>The BCP are the global benchmark for banking supervision, used by the International Monetary Fund and the World Bank to assess national frameworks. The <\/span>2024<\/a>revision (pdf)<\/a> \u2014 the first since 2012 \u2014 introduced stricter expectations on operational resilience, emerging risks, and supervisory action, following gaps exposed during the Covid-19 pandemic and 2023 banking turmoil. The DFSA <\/span>issued amendments<\/a> in December to tighten risk management standards through requirements for risk appetite statements and interest rate risk assessments.<\/span><\/p>\n

New risk governance requirements: <\/strong>Large and complex firms would be required to establish an independent risk management function, led by a senior manager. Removing the appointed senior manager would need board approval and, in some cases, would also be reported to supervisors. Boards would also need to oversee risk appetite frameworks and ensure coverage of emerging risks such as climate and digitalization.<\/p>\n

Expanded definitions for risk exposures: <\/strong>The DFSA proposes broadening the definition of concentration risk to include exposures by asset class, product, or funding source. It also plans to expand related-party rules by introducing a definition of affiliates and requiring all such transactions to meet arm\u2019s length standards and receive board approval.<\/p>\n

Credit risk and provisioning updates: <\/strong>The regulator plans to align its credit risk framework with International Financial Reporting Standards (9) by:<\/p>\n