Page 29 - Annual Report 2021 EN
P. 29
/ 29 T ABLE OF C ONTENT S
Bank and Insurance Supervision (BIS) Supervisory priorities for 2021 Business models and profitability drivers Enterprise Risk Management
The BIS team is responsible for the prudential COVID-19 risks to the QFC banking system The team evaluated the business models and Additionally, the BIS team focussed on evaluating
supervision of 11 banks and 13 insurance companies — profitability drivers of QFC banks and insurers, enterprise risk management frameworks, the firms’
operating in or from the Qatar Financial Centre. The team significantly focussed on the impact of focussing on the evolution post the effect of the risk strategy and risk appetite framework. The team
the pandemic on QFC-authorised firms. Supervision geopolitical events and the pandemic. In particular, engaged with all QFC institutions on their incident
The majority of QFC banks and insurers are set up as reviewed the evolution of the bank’s business models the Supervision team expanded its dialogue with response, crisis management and cybersecurity
branches or subsidiaries of international institutions considering the disruptions and dislocations in the the governing bodies and management on the need frameworks giving the challenging operational landscape
with significant reliance and operational support from economic environment, conducted deep dives on to ensure that the control environment and risk with work-from-home arrangements and operational
the parent. There are also sizeable locally incorporated asset quality and sought to understand how QFC infrastructure were sufficiently adapted to meet the resilience a key concern. QFC firms demonstrated
institutions licensed and regulated by the QFCRA. institutions’ funding and liquidity strategies evolved demands posed by the challenging economic climate. that they had adequately adjusted their business
to meet the challenges posed by the pandemic. The continuity plans to accommodate work-from-home
In 2021, the BIS team continued to face similar potential impact on insurers was alleviated by prompt scenarios and were able to replicate operational
Credit Risk and Asset Quality
challenges arising from the COVID-19 pandemic, intervention and support of the healthcare sector by processes in the virtual work environment without
which necessitated an adjustment in the level and the Qatari government and lower traffic volumes. significant impact on their operational risk profile.
Given that credit risk is the most significant risk within
type of supervisory engagement with authorised
QFC banks, Supervision conducted asset quality
firms. As the work-related restrictions started to ease, Throughout 2021, Supervision instituted various
reviews at all corporate and investment banks and Engagements with external auditors
a gradual return to regular supervisory interactions measures to manage the risks arising from the pandemic
reviewed the impact of the pandemic on the credit
commenced, focussing on hybrid models that allowed and ensure a stable and sound financial system. The
portfolios. The team also evaluated credit underwriting The discharge of the QFCRA’s regulatory and
for a mix of virtual and onsite risk assessment visits, supervisory approach comprised the following elements:
standards focussing on sectoral and geographic supervisory mandate places reliance on the work of
desktop-based assessments, and thematic reviews.
• Ongoing monitoring and assessment of concentrations, large exposures and collateral the external auditors as approved assurance providers.
the vulnerabilities and risks arising from valuations. Additional guidance was issued on non- Supervision maintained continuous engagement
credit risk, asset quality, and liquidity performing loans and forbearance to ensure that with QFC-approved auditors in designing an effective
• Encouraging the use of flexibility embedded firms’ Expected Credit Loss models were robust and assurance framework over the prudential reporting and
in the Basel framework in the use of buffers adequate provisions set aside per regulatory norms. financial statements audits aligned with recognised
during periods of systemic shocks accounting and auditing standards. New guidelines
• Co-ordination with external auditors on the valuation were issued to govern the conduct of Agreed-Upon
IBOR transition
of assets and computation of ECL under IFRS 9 Procedures and reasonable assurance reports over
• Monitoring the implementation of the firms’ reporting obligations for the year 2021.
Following the thematic review conducted in 2020
relief measures extended by the State of
on the transition from the Interbank Offered Rates
Qatar to mitigate any risks arising
(“IBOR”) benchmarks, Supervision continued
monitoring QFC-firms’ progress in transitioning to
Alternative Reference Rates while also mitigating risks
associated with the transition by the end of 2021.
