Internal Governance

Internal Governance Structures

The Central Bank Commission has overall responsibility for the management and control of the Central Bank. A number of internal committees further co-ordinate the development and implementation of policies and to advise and inform on major issues.

• High-Level Committees Chaired by the Governor
• Other High-Level Committees

Internal Audit

Internal Audit is an independent, objective assurance and consulting function designed to add value and improve the performance of the Central Bank in delivering upon its strategic responsibilities. It systematically evaluates the effectiveness of risk management, control and governance processes. Internal Audit is a member of the Internal Auditors Committee (IAC) of the ECB and is responsible for auditing the local components of ESCB systems and processes. The IAC is the internal audit function for the Eurosystem and European System of Central Banks. Internal Audit is a third line of defence function.

The Head of Internal Audit reports directly to the Governor and has unrestricted access to the Audit Committee and the members of the Senior Team. Internal Audit is responsible for reporting significant risk exposures and control issues to the Commission and Senior Management.

Internal Audit’s purpose, authority, responsibility and position within the Central Bank is outlined in the Central Bank Internal Audit Charter.  A link is also provided to the Audit Charter for the ESCB and Single Supervisory Mechanism.

Risk Management

Risk management and robust internal control are an integral part of the Central Bank's governance and management systems. Risk management comprises the identification and assessment of risks, the implementation of control measures, the review and monitoring of controls and regular reporting to senior management and the Commission on the effectiveness of control measures. The Central Bank's risk management frameworks seek to safeguard the security, continuity, compliance and integrity of operations in support of the Central Bank's strategy and business objectives. The accountabilities of management and staff in respect of the Central Bank's risk management frameworks are set out in a range of policies, which are reviewed and approved by the Commission or its sub-Committees.

Risk Appetite

The Central Bank Commission has defined an overarching risk appetite. The risk appetite and underlying limits and tolerances are an important part of the Central Bank's internal governance. The risk appetite supports the Central Bank's risk management approach, which includes measures for identifying and assessing financial and non-financial risks, implementing and monitoring the adequacy of control measures, managing incidents and breaches, and reporting the status of risks, control and remedial actions. Assessing the Central Bank's actual risk profile against its risk appetite permits the Commission to determine the adequacy of these risk management activities. An abridged version of the risk appetite is provided below.

High-Level Committees Chaired by the Governor

• The Executive Leadership Committee acts as the key executive decision making body in the Central Bank on all strategic policy issues; and provides and oversees strategic direction. The Committee’s role is to advise, assist and support the Governor in fulfilling his or her responsibilities, including those functions delegated by the Commission to the Governor. For the purpose of this Committee the Governor is identified as the key decision maker.
• The Financial Stability Committee advises on issues related to the Central Bank's financial stability mandate. The committee monitors and assesses domestic and international economic and financial developments, highlights potential areas of concern relevant to the Irish financial system and draws conclusions from the analysis. A key focus of the committee is to identify potential actions that can be taken to mitigate risks to financial stability and to follow up on previous measures. Formulation of specific actions may be requested by the Governor for completion by management within or outside the committee. Actions may take the form of consideration and review of macro-prudential policy instruments as well as consideration of recommendations from and to the Central Bank’s Macro-prudential Measures Committee.
• The Macro-prudential Measures Committee advises on the regular reviews of relevant national macro-prudential measures and makes recommendations about maintaining or revising these rules as appropriate. The Central Bank is the designated national macro-prudential authority in Ireland. In recent times, several macro-prudential measures have been activated via the banking system. These include: borrower-based measures such as mortgage rules; the counter-cyclical capital buffer; the other systemically important institution buffer; and reciprocation of macro-prudential policy measures taken by other Member States.

Other High-Level Committees

• The Risk Management Committee oversees the design, maintenance and continuous development of effective frameworks for the management of the Central Bank's principal internal risk exposures. A key objective is to ensure risks are managed within the Commission’s approved risk appetite and associated tolerances. The committee also reviews relevant risk items before they are submitted to the Commission’s Risk Committee.
• The Performance and Resourcing Committee (chaired by the Chief Operations Officer) oversees the day-to-day operations of the Bank, including monitoring performance and related resource utilisation, making adjustments as necessary.
• The Resolution Committee advises the Governor on issues central to the fulfilment of the Central Bank’s role in the resolution of: the Central Bank and Credit Institutions (Resolution) Act 2011; the European Union (Bank Recovery and Resolution) Regulations 2015; the European Union (Single Resolution Mechanism) Regulations 2015; and those institutions categorised as ‘Category 1’ firms11 12 or MiFID firms, Insurance and Reinsurance firms categorised as ‘Category 2A’ firms in the Central Bank’s Authorisations and Revocations Framework.
• The Policy Committee advises on regulatory policy issues and initiatives including consultation papers, feedback statements, codes, guidelines, and regulations before their adoption in accordance with relevant delegations.
• The Supervisory Risk Committee advises on issues central to the management of supervisory risks and also, on the development and enhancement of risk-based supervision and supervisory engagement.
• The Economic Policy and Research Committee advises on the Central Bank’s role in informing economic and related policy making at domestic and European levels and to oversee the Bank’s policy research programme.
• The Authorisation Committee will be convened to consider the authorisation of certain regulated entities as required.
• The Financial Regulation Framework Committee centralises oversight of the Fitness and Probity regime. The committee drives the effectiveness of the Fitness and Probity regime and direct its impact on the financial services industry. The committee considers Central Bank strategy and policy (to include regulatory, supervisory and enforcement policy, including implementation of regulatory or legislative change) and facilitates co-ordination, cooperation and consistency in relation to the operation of the Fitness and Probity regime across the Central Bank.