Key Considerations in Conducting an Assessment
Consistency to the extent possible, fairness, and objectivity are key, but the primary objective of the assessment remains, not to compare a country’s performance with others, but to identify and to address individual countries’ strengths and weaknesses. Consistency—defined as a uniform approach to assessments and avoidance of contradictions in assessment grading—is reinforced through the use of assessment methodologies and assessment guidance notes and through the review of draft assessments by other experts. “Calibrating” the BCPs or modifying the assessment criteria to country-specific factors would, however, be contrary to the Basel Committee’s intended objective of viewing the BCPs as a standard to be universally adopted and implemented. The quality of the assessment is enhanced when the “four eyes” approach is used—that is, the reliance on two experts with a mix of skills and backgrounds—because it helps mitigate the risk of individual bias.
A well-prepared self-assessment—including the summaries of the relevant legal and regulatory texts, as well as a thorough description of the institutional framework and supervisory practices—is essential. The assessors should meet with the authorities, banks, and other agencies and private sector counterparts. Relevant issues should be discussed not only with the supervisors but also, for instance, with other regulators, the Ministry of Finance, and the representatives from the central bank, as well as from the private sector (e. g., bankers, insurance companies, securities market participants, external rating agencies, and external auditors).13
The assessor may need to take into account the countries’ level of development while assessing the supervisory prerequisites (Core Principle 1). Differences in prerequisites are likely to have a bearing on the detailed principle-by-principle assessment. For example, when assessing how the collateral value is accounted for in prudential regulations, assessors will have to consider the efficacy of the legal system and whether or not enforcement of regulatory and judicial decisions is problematic. Assessors should reflect the country – specific factors in the “comment” section of the assessment template, and deficiencies can be incorporated in a forward-looking, sequenced action plan. Any considerations relating to the level of development and country-specific circumstances should be reflected fully in the “comments” section of the assessment templates and in the “recommended action plan.”