The official site of Italy's central bank

Risk management and control

The heightened complexity and interdependency of financial markets demand ever closer attention to market analysis and risk assessment and control. In particular, the widening range of financial instruments available to the Bank of Italy necessitated risk management techniques designed to support the objectives of reasonable return and preservation of assets' value.

The Bank of Italy engages in integrated management of financial risk (market, credit, and liquidity risks) and in the control and assessment of operational risks in connection with the investment of own resources, foreign exchange reserves, the staff pension fund and its other euro-denominated and foreign exchange portfolios. The Bank also manages the risks in connection with its shareholdings and weighs the risks of assets eligible for the monetary policy operations that Eurosystem rules assign to the national central banks, as well as the assets pledged as collateral for extraordinary financing operations.

These functions are performed by the Risk Management Department, within the functional area grouping the departments that perform operational investment activities but independent with respect to those departments.

Improving coordination and support for decision-making is the task of the Financial Strategy and Risk Committee, which has advisory functions in the formulation and evaluation of strategy for financial management. The committee is chaired by the Governor, or in his place a member of the Directorate (Governing Board).

Two other committees also have a role in financial management:

- the Investment Committee, chaired by the Managing Director for the central banking, markets and payment systems area; the committee evaluates and approves proposals concerning tactical deviations from strategic benchmarks for the Bank's entire financial investment portfolio;

- the Advisory Committee on Financial Management of the Staff Pension Fund, instituted under Article 29-bis of the Fund Rule; its task is to provide opinions and technical observations on general investment choices.