BAKU, Azerbaijan, March 11. The Central Bank of
Azerbaijan (CBA) has approved the "Banking supervision strategy"
covering 2026-2027 within the framework of risk-based supervision
processes, Trend
reports via the CBA.


In accordance with the targets set within the "Financial sector
development strategy for 2024-2026" and within the framework of the
"Financial sector modernization project" implemented jointly with
the World Bank, the initiatives envisaged for the implementation of
risk-based supervision have been successfully implemented by the
CBA. Thus, during the past two years of the strategy, the "Policy
concept of the CBA on risk-based supervision" (https://uploads.cbar.az/assets/7fd12f0749b180441d54cd4de.pdf)
was approved, and based on that concept, risk-based supervision
tools were created and tested on pilot banks within the framework
of the Azerbaijan Risk Assessment System (ARAS).


As a result, last December, the "Instructions of the CBA on
risk-based supervision of banks" were approved. Based on the
aforementioned Instructions, the CBA approved the "Banking
supervision strategy" covering 2026-2027. The strategy aims to
implement the following supervisory priorities in the risk areas
considered more relevant for banks in the next two years:


Strengthening the resilience of banks to macroeconomic
threats.


Improving the activities of banks in managing business model
sustainability and profitability;


Strengthening the operational resilience of banks;


Modernizing the risk management framework in banks.


Strengthening the framework for corporate governance, risk
culture, and consumer rights protection in banks.







In addition, to support the above priorities, the "Bank
supervision strategy" aims to develop the CBA's regulatory
framework in the following areas:


Modernizing regulations on improving the risk management and
stress-testing framework in banks;


Incorporation of part of the "Recommendations on corporate
governance standards in banks" approved by the CBA in 2024 into the
regulatory framework;


Application of requirements for the Internal Capital Adequacy
Assessment Process (ICAAP) and Internal Liquidity Adequacy
Assessment Process (ILAAP) in relation to banks to increase
compliance with Basel III standards;


Integration of climate and Environmental, Social, and Governance
(ESG) risks into the regulatory and supervisory framework.


The measures taken by the CBA to implement risk-based
supervision not only serve the objectives set by the relevant
policy concept but also contribute to ensuring the long-term
sustainable development of the banking sector and increasing its
resilience to potential shocks.


Stay up-to-date with more news on Trend News
Agency's WhatsApp channel